Preamble

The House met at Half past Two o'Clock

PRAYERS

[MR. SPEAKER in the chair]

Oral Answers to Questions — ROADS

Dartford-Purfleet Tunnel

Mr. Dodds: asked the Minister of Transport and Civil Aviation if he can yet state the result of the traffic check to assess the current needs for the completion of the Dartford-Purfleet tunnel carried out by Metropolitan Police officers and representatives of the London, Kent and Essex County Councils.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. Hugh Molson): I understand that the anaylsis of the results of this survey has not yet been completed.

Mr. Dodds: In view of the great importance of this scheme and the great interest in it, can the Minister state when it is likely that it will be completed?

Mr. Molson: The figures from the Kent County Council have been received and those from Essex are expected shortly. It will then take about a week for the Divisional Road Engineer to check the results and, after that, it is hoped that the survey will be completed.

Pedestrian Crossings (Flashing Beacons)

Mr. Harold Davies: asked the Minister of Transport and Civil Aviation if he is aware of the fact that the intermittent flashing amber beacons on zebra crossings are tending to confuse motorists who drive up to them and thereby increase the possibilities of road accidents; and whether he will change the system of lighting up zebra crossings.

Mr. Molson: I would refer the hon. Member to the answer I gave to my hon.

Friend the Member for Cheadle (Mr. Shepherd), the hon. Member for Islington, North (Mr. Fienburgh) and the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) on 18th November.

Mr. Davies: Whilst thanking the Minister for that reply and informing him that I have looked through those answers, may I ask whether he or the Ministry have consulted the Road Research Laboratory on the effect of these flashing beacons? They say that there has been a 14 per cent. decrease in the number of deaths of pedestrians as a result of the installation of zebra crossings. Would the Minister be prepared to finance a little research into the use of these flashing beacons? Does he not agree that that research could be conducted by the Road Research Laboratory and that funds from motor taxation could be raided for the purpose?

Mr. Molson: These flashing beacons were introduced at the suggestion of the Road Research Laboratory.

Eton High Street (Accidents)

Mr. Fenner Brockway: asked the Minister of Transport and Civil Aviation if, in view of the danger of accidents in Eton High Street, where an elderly man and a college boy have recently been knocked down, he will take steps to reduce the speed limit to 15 miles per hour and to have a notice displayed between the Playing Fields and the Burning Bush reminding motorists that there is a speed limit.

Mr. Molson: I am doubtful whether either of these measures would reduce accidents on this road, but I am having a special investigation made and will communicate again with the hon. Member.

Mr. Brockway: Will the Minister speed up this investigation? Is he aware that this little country road, passing between antique shops, has become a major traffic road between north and south? Is he aware that the chairman of the transport committee of the urban district council and a master at Eton College says:
…the dangers of Eton High Street and of the College area are perfectly frightful and I am very anxious lest some extremely serious accident should take place. For example, some 20 boys"—

Hon. Members: Speech.

Mr. Speaker: These supplementary questions are really getting too long.

Mr. Brockway: I accept that at once, Mr. Speaker. Is the Minister aware that there is danger, not only to the College boys, but to the boys of the elementary school and the old folk from the alms houses? Will he do something speedily in this matter to prevent accidents?

Mr. Molson: I have made myself familiar with the traffic problems that exist on this road.

Safety Exhibition

Mr. P. Roberts: asked the Minister of Transport and Civil Aviation whether he will authorise expenditure to assist the travelling road safety display, at present operated by Mr. A. H. Pollitt, 12, Browning Road, Wadsley Bridge, Sheffield, 6, in order that his display may be made available throughout the country, thereby helping to reduce the rising toll of road accidents.

Mr. Molson: Local authorities who wish to hire travelling road safety displays can obtain a grant of 50 per cent. towards the cost from the Ministry. Should any local authority think it worth while to hire Mr. Pollitt's exhibition, these arrangements would apply.

Improvements, Scotland

Mr. Hamilton: asked the Minister of Transport and Civil Aviation what major road improvements, costing over £500,000 each, have been commenced, completed, or contemplated in Scotland in the current financial year; and on what similar projects can a start next year be undertaken.

Mr. Molson: In the current year, none, Sir. I cannot say what schemes can be started next year until we know what funds will be available.

Mr. Hamilton: Is not this a sorry state of affairs? Is the Joint Parliamentary Secretary not aware that he said last week that priorities were indicated in each year's Estimates, and are we to take it that the Government do not think that a single scheme in Scotland is worth priority to the extent of £500,000? Is the hon. Gentleman further aware that each of the first four years of the Forth Road

Bridge project would involve less than £500,000, and does he not think it desirable that at least a start should be made on this very desirable project?

Mr. Molson: The hon. Member will have to await the publication of the Estimates, and, without making any commitment, I hope that it may be possible to incorporate some substantial schemes for the benefit of Scotland next year.

Mr. Woodburn: Would the hon. Gentleman ask the Minister to look very carefully at some of the very dangerous roads which urgently need improvement, such as the main road between Glasgow and Stirling, which is a really disastrous road so far as traffic is concerned? There should be some arrangement of an urgent nature to get it put right.

Mr. Molson: I entirely agree with the right hon. Gentleman, and we have that road very much in mind.

Mr. Hamilton: asked the Minister of Transport and Civil Aviation how the priorities concerning major transport projects in Scotland in the financial year 1954–55 will differ from those of the cur rent year; and what are the reasons for such differences.

Mr. Molson: I cannot say what priorities will be next year until we know what funds will be available.

Mr. Hamilton: Can the Minister give us a specific undertaking that a definite list of priorities will be indicated in the forthcoming Estimates, and can he indicate whether there is any prospect at all of the Forth Road Bridge featuring in it?

Mr. Molson: I think the hon. Gentleman is quite capable of understanding the Estimates when they are produced.

Loch Ainort-Sconsor Road

Lord Malcolm Douglas-Hamilton: asked the Minister of Transport and Civil Aviation when it is intended to commence work on the Loch Ainort-Seonsor diversion road; and when it is expected that this will be completed.

Mr. Molson: As I have already informed my hon. Friend, it will not be possible to include this scheme in the £1 million Highland programme which is to be carried out during the next three


years. It will, however, be reconsidered in the light of whatever funds may be available for Highland roads after the expiration of the present programme.

Lord Malcolm Douglas-Hamilton: Do I understand that answer to mean that it will not be started for another three years? May I ask my hon. Friend to bear in mind the Kyleakin-Portree road, by which most people come on to and leave Skye? This road is not only very important to the tourist industry—and most of the services are at present in a shocking state—but in its present state it is a considerable incubus to the present population of Skye.

Mr. Molson: We are aware of the importance of this road. I did not mean to convey that in no circumstances will work upon it begin during the next three years. I meant to say that it is not one of the works which can be undertaken out of the present £1 million grant. When the Estimates are presented that will be considered with other Scottish projects which are also of considerable importance.

Oral Answers to Questions — CIVIL AVIATION

Trooping Contracts

Mr. Lindgren: asked the Minister of Transport and Civil Aviation when trooping was first reserved for the independent charter operators.

Mr. de Freitas: asked the Minister of Transport and Civil Aviation when the nationalised civil aviation corporations were asked not to tender for trooping so that the independent charter operators could tender without fear of competition from the nationalised corporations.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. John Profumo): The reservation of trooping to independent charter operators, so far as it exists, derives from the principle, established for many years, that charter work is only incidental to the main business of the Corporations. The intention which my right hon. Friend announced to the House on 27th May, 1952, that the Corporations would not maintain aircraft specifically for charter work naturally precludes them from tendering for regular trooping flights but

they are not thereby debarred from tendering for ad hoc troop movements.

Mr. Lindgren: While thanking the Minister for that reply, may I ask whether he would agree that the statement by his right hon. Friend on 27th October, reported in column 2748 of the Official Report, was therefore inaccurate?

Mr. Profumo: As the hon. Member will admit, my right hon. Friend has already written to him fully on this subject. What my right hon. Friend had in mind when he made that statement was that under the late Government trooping contracts were always then placed by competitive tender, a practice which, for various reasons, naturally gave independent operators certain competitive advantages.

Mr. Callaghan: Would it not be better for the Parliamentary Secretary to withdraw the statement made by the Minister that trooping was reserved first of all by the Socialist Government, as that was inaccurate?

Mr. Profumo: I do not know whether the hon. Member has seen the letter my right hon. Friend wrote. I think that it would be wrong for me to withdraw something which my right hon. Friend said, because I have indicated clearly to the House that my right hon. Friend was trying to impart an intention, and if the statement was misunderstood the letter to the hon. Member for Welling borough (Mr. Lindgren) was intended to try to clear up the matter.

Mr. Callaghan: I accept that, but will not the Parliamentary Secretary say quite simply that the statement that the reservation of trooping for independent operators was decided by the Socialist Party was wrong?

Mr. Profumo: It did amount to the reservation of trooping contracts to independent operators, but, in so far as my right hon. Friend may have misled the House, I know that he would wish me to withdraw and correct the impression which was given.

Maintenance Staff, Renfrew Airport

Mr. John Taylor: asked the Minister of Transport and Civil Aviation what steps are being taken to avoid the gradual


reduction of activity and skilled staff at Renfrew Airport as a result of the present policy of concentrating all overhaul and maintenance work on Elizabethans and Viscounts in London Airport and all similar work on Pionairs and Vikings in Renfrew Airport with consequent lessening activity in the latter as the older types of aircraft are sold.

Mr. Profumo: I understand that the management of British European Airways and representatives of the trade unions concerned are in consultation on this matter through the machinery of the National Joint Council for Civil Air Transport. No decisions on the future activity of the Renfrew maintenance base will be reached before further meetings have been held.

Mr. Taylor: Would the Joint Parliamentary Secretary be willing to pass on to this Joint Committee the following considerations: the importance of maintaining an aircraft industry in Scotland, the threat that exists to that industry and the need for some alternative work at Renfrew Airport to take the place of the work that is departing because of the sale of the older types of aircraft?

Mr. Profumo: In so far as those problems concern the consultations which are now taking place, I am quite sure that they are well aware of them.

Colonel Gomme-Duncan: Is my hon. Friend aware that this seems to indicate a change of policy on the part of B.E.A.C. and that there is genuine apprehension in Scotland that this industry may be lost to Scotland?

Mr. W. Elliot: Before my hon. Friend answers, might I ask him whether he is in consultation with the Service Departments as to the great importance of the dispersal of aircraft work and the strong inadvisability of concentrating it especially within easy bombing range of the Continent?

Mr. Profumo: These matters are all well known and are under consideration.

Aircraft Crash, Sicily (Report)

Mr. Benn: asked the Minister of Transport and Civil Aviation why he has accepted the findings of the Italian authorities on the Hermes air crash off Sicily.

Mr. Profumo: My right hon. Friend is in general agreement with the findings of the report. The fact that Italian accident investigation procedure does not include a similar provision to that made in Regulation 7 (5) of the United Kingdom Regulations is only relevant in this case to publication.

Mr. Benn: Is the hon. Gentleman aware that the operating company were not allowed to have a representative at the inquiry into one of their own aircraft, nor were the survivors consulted by the Italian Commission in arriving at their conclusion and producing a report which the Minister himself says is a violation of elementary British justice? Is he aware that this cannot be regarded as the end of the matter?

Hon. Members: Answer.

Mr. Callaghan: Is not the Parliamentary Secretary proposing to deal with this matter?

Mr. Profumo: I have nothing to add to what I have just said, and I made a very full statement on the subject the other day during the adjournment debate.

Mr. Callaghan: With respect, could the Parliamentary Secretary tell us why he refuses to hold an inquiry himself?

Mr. Profumo: I thought I made it very clear the other day in the statement I made to the House. If, on reading it, the hon. Gentleman finds that there is any misunderstanding or anything about which he is not clear, perhaps he will put down a Question.

Mr. Callaghan: With great respect, it is precisely because the Parliamentary Secretary did not make this clear that we are now asking him about it. Why can he accept the report of the Italian Government of an inquiry on an aircraft operated by a company in this country?

Mr. Profumo: As I have already said, my right hon. Friend is satisfied with the findings of the report.

Several Hon. Members: rose—

Mr. Speaker: I would remind the House that this matter was thoroughly discussed on an Adjournment debate. It is unfair to other hon. Members to try to repeat that discussion now.

Mr. Benn: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest possible opportunity.

Mr. Benn: asked the Minister of Transport and Civil Aviation what representations were made to the Italian authorities investigating the Hermes air crash off Sicily by Her Majesty's Government, either for themselves, or on behalf of the survivors, the crew or the operating company.

Mr. Profumo: During the investigation a list of representations compiled by a committee representing the surviving passengers was forwarded to the Italian Commission by Her Majesty's Government, but no other representations were made.

Mr. Benn: Does not the hon. Gentleman feel that the British Government have some responsibility to the operating company regarding this crash, because they were unable to have a representative at the investigation, and that the Government should press the matter? Secondly, may I ask why the Government did not forward to the Italian commission of inquiry the replies to the questionnaire sent to the survivors, until at a late stage they were, in fact, asked for by the Italians?

Mr. Profumo: This matter was entirely in the hands of the Italian Government under International Regulations. Her Majesty's Government feel that everything was done correctly and that nothing has been ignored which our Department should have dealt with during the course of the investigation.

Mr. Benn: In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.

Mr. Benn: asked the Minister of Transport and Civil Aviation why he has circulated the Italian report on the Hermes air crash off Sicily to certain survivors of the accident.

Mr. Profumo: It is the normal procedure to circulate copies of unpublished accident reports to those interested parties who ask for them.

Mr. K. Thompson: On a point of order. Is it in order for an hon. Member to address a Question to a Minister when he has previously given notice that he intends to raise the subject of the Question on the Adjournment?

Mr. Speaker: That had occurred to me, but this is a new point, though it should not be followed up by supplementary questions.

Mr. Benn: Is the hon. Gentleman aware that 13 survivors of this aircraft tell me that they regard the position as unsatisfactory and that a further 10, including the inspector of Civil Aviation in the Sudan, have asked me to take the matter a step further? Does he realise that the handling of this matter by his Department is totally unsatisfactory in every way?

Mr. Speaker: Perhaps the hon. Gentleman will pursue that in the debate on the Adjournment.

Oral Answers to Questions — TRANSPORT

Road Services Licensing (Report)

Mr. Nabarro: asked the Minister of Transport and Civil Aviation whether he will now state the expected date of publication of the Report of the Thesiger Committee established to inquire into certain aspects of the statutes in relation to road passenger transport matters.

Mr. D. Jones: asked the Minister of Transport and Civil Aviation if he can now announce the date of publication of the Thesiger Report.

Mr. Molson: My right hon. Friend hopes that the Report will be published at the beginning of December.

Railway Safety Devices

Mr. Nabarro: asked the Minister of Transport and Civil Aviation whether he has now considered all the implications of the Report upon the Harrow train disaster; and whether he will make a statement as to the measures he proposes to adopt to improve railway safety in every sphere, including standardisation and general application of systems of multi-light colour signalling and automatic train control devices.

Mr. Molson: My right hon. Friend has now considered all the implications of the Report upon the Harrow train disaster. As he informed the House on 6th July, the Transport Commission, who are responsible for safety of railway operation, has decided to extend automatic train control. As my hon. Friend is aware, trials with new equipment designed for this purpose are being conducted on the Barnet—Huntingdon line. In addition, multi-aspect colour light signalling is being extended where justified by the traffic. The standards for new signalling works are laid down in the official publication entitled "Requirements for Passenger Lines and recommendations for Goods Lines."

Mr. Nabarro: A very good answer.

Headlights (Dazzle)

Mr. Keenan: asked the Minister of Transport and Civil Aviation if he is considering the dangers arising out of the unrestricted use of motor headlights on roads; and what steps he is taking to avoid the dangers which arise from the misuse of headlights.

Mr. D. Jones: asked the Minister of Transport and Civil Aviation whether he is now in a position to make a statement on the action he proposes to take on the question of the universal system of headlamp dipping on mechanically propelled road vehicles.

Mr. Molson: We are acutely aware of the problem of headlamp dazzle. Many suggestions have been made on this subject, but we are not satisfied that any of the methods so far proposed offers a satisfactory solution. A series of international tests, in which our technical advisers are taking part, is to be held in America next year, and my right hon. Friend proposes to await the outcome of these before considering further action in this country. As regards dipping, we do not think it desirable at present to go beyond the provisions of the Highway Code, which advises motorists to dip their headlamps when meeting other vehicles unless there are exceptional circumstances which make it unsafe to do so.

Mr. Keenan: Is the Minister aware that the absence of regulations means that only by observing the courtesy of the

road does an individual dip his headlights? Is the Minister aware that because this is not done very serious accidents are caused, particularly on country roads. Is it not true that in France there are regulations which do something to enforce the dipping of lights to prevent this type of accident?

Mr. Molson: The question of whether it is desirable to make the dipping of headlights compulsory was considered. It was decided not to do so for two reasons. The first was the difficulty of prescribing precisely the occasions and the time when lights were to be dipped and, secondly, the difficulty of enforcing any such law.

Mr. Jones: Is the hon. Gentleman aware that since May, 1952, representations were made to his Department by a trade union catering for a large number of omnibus drivers expressing grave apprehension at the variety of instructions relating to headlight dipping? Is he further aware that in February, 1953, his right hon. Friend informed the trade union concerned that he was considering a report he had received from the Road Research Laboratory? How much longer will the right hon. Gentleman consider the matter before coming to a decision?

Mr. Molson: The Road Research Laboratory is constantly at work on this subject. We have discovered that a large proportion of the headlamps in use on the roads are not correctly focussed, which undoubtedly greatly increases the danger. This matter is under constant consideration and discussion, and experiments are constantly being undertaken by the Road Research Laboratory on the subject, but, as I mentioned in my reply, no final decision will be come to until after the experiments have taken place in the United States.

Mr. R. Bell: Does my hon. Friend realise that this matter is rather urgent and has been under consideration for a very long time? Is it possible to introduce some such system as there is in France of having yellow headlamps, without prejudice to a later and better solution? Will the Department confer with the Home Office to ensure that the existing lighting Regulations requiring that lamps are properly focussed and that the dipping device is in working order are better enforced?

Mr. Molson: In the first place, it is important that we should not constantly alter the Regulations. Therefore, it is very much better for us to wait until we are quite convinced that we can improve the present Regulations. Research is taking place upon this matter the whole time as I have said, and we are fully alive to its importance and urgency.

Licensing (Prohibition Notices)

Mr. Ernest Davies: asked the Minister of Transport and Civil Aviation how many of the 21,200 prohibition notices issued by officials of the licensing authorities in accordance with the provisions of Section 17 (3) of the Road and Rail Traffic Act, 1933, during the years ended 30th September, 1952, and 1953, respectively, related to British Road Service vehicles.

Mr. Molson: Of the 21,189 notices issued during the year ended 30th September, 1952, 1,175 related to vehicles operated by the British Transport Commission; separate figures for vehicles employed by British Road Services are not available. Figures for the year ended 30th September, 1953, are not yet complete.

Mr. Davies: Would not the Parliamentary Secretary agree that these figures indicate that the British Road Services vehicles have been kept in a comparatively better serviceable condition, inasmuch as the number of notices has not been so large, than those of private operators? Does that not show that the break-up of the organisation and its return to a large number of small units will lead to a deterioration in the condition of the road haulage vehicles on the roads?

Mr. Molson: No, Sir. The figures actually point to a diametrically opposite conclusion. This prohibition was applied to 1 in 47 of the vehicles in the hands of private owners and to 1 in 46 of those owned by the British Transport Commission.

Crash Helmets

Mr. Sorensen: asked the Minister of Transport and Civil Aviation what information he has demonstrating the protective value of crash helmets to

motor-cyclists involved in accidents; and whether there is a supply of these helmets sufficient for all motor-cyclists.

Mr. Molson: Medical research shows that the wearing of the best type of helmet greatly reduces the likelihood of fracture of the skull in accidents and makes head injuries generally less severe; and sample figures taken before crash helmets were common in civilian use indicated that the incidence of head injuries in motor-cycle accidents was over 50 per cent. among civilian riders but only about 27 per cent. among Army riders wearing crash helmets. I understand from my right hon. Friend the President of the Board of Trade that supplies of crash helmets appear to be keeping pace with the present demand.

Mr. Sorensen: What percentage of motor-cyclists is it estimated wear these crash helmets, and can something be done to secure a large production of these helmets at a reasonable price to encourage their purchase by motor-cyclists?

Mr. Molson: I am afraid that I have no figures to show how many motorcyclists wear them, but steps have been taken by the President of the Board of Trade to make these helmets readily available; since 13th November they have been on open general licence for importation as there are certain good French and German designs

Oral Answers to Questions — SHIPPING

Secondhand Shipping(Sale)

Mr. Awbery: asked the Minister of Transport and Civil Aviation if he is aware that a large amount of secondhand shipping is being sold to nations that refuse to recognise international regulations and the Convention on Safety of Life at Sea laid down by the International Labour Organisation; that these vessels will be competing with our own Merchant Navy, which conforms to stringent regulations; and what steps he proposes to take to remedy this matter.

Mr. Molson: I am aware that a substantial tonnage of United Kingdom secondhand shipping has been sold to countries that have not yet accepted the International Convention for the Safety


of Life at Sea, 1948, which I take it the hon. Member has in mind. We believe that of these, the countries which have the largest fleets will accept the Convention before long. To prevent the sale of secondhand tonnage to those countries which have not so far accepted the Convention would merely deprive the British shipping industry of much needed funds for replacement, without, in my opinion, expediting their acceptance of the Convention.

Mr. Awbery: Is the Minister aware that since 1939 Panama has jumped from ninth to fourth on the list of maritime nations, having increased her tonnage by 500 per cent., while this country has increased her tonnage by only 15 per cent.? Is he also aware that Panama is refusing to carry out the recommendations of the I.L.O.? Cannot the hon. Gentleman do something to boycott the sale of shipping to Panama until the Regulations are adopted by that country?

Mr. Molson: The hon. Member asked me in his Question about Conventions on the Safety of Life at Sea. The only such Convention to which Panama has not conformed is that of 1948. This year, by executive decree, the President of Panama required Panamanian ships to put that Convention into operation. As to the Conventions of the International Labour Office, we are not guided in our decisions about giving permission for the sale of ships by the question of whether or not a country applies or has ratified those agreements.

Mr. Awbery: rose—

Mr. Speaker: The hon. Member has had a long supplementary reply.

Transferred Tonnage (Panama)

Mr. Awbery: asked the Minister of Transport and Civil Aviation how many vessels were transferred from the British to the Panama flag in 1951 and 1952; what was the tonnage involved; how many were of new construction; and how many secondhand.

Mr. Molson: In 1951 and 1952 75 ships of 426,000 gross tons were transferred from the United Kingdom and colonial registers to Panama. Five ships of 62,000 gross tons were also completed in British yards for first registry in Panama.

Mr. Awbery: Is the Parliamentary Secretary aware that a large part of the shipping sold to Panama is slum shipping, some of it 30 years old? Is he not aware that a large amount of the shipping owned by Panama companies is under the control of nationals of other countries, who sail under the Panama flag because they can evade the obligations of the I.L.O., and is he doing anything about that?

Mr. Molson: In considering whether or not to allow the transfer of tonnage from the British register to other registers, my Department is influenced by considerations of national security and not by considerations relating to I.L.O. Conventions.

Mr. Nabarro: Will my hon. Friend bear in mind that the figure of the tonnage of shipping which he indicated as having been transferred to Panama—426,000 tons—represents only 2 per cent. of the total British Mercantile Marine tonnage and is, therefore, practically nugatory?

Oil Pollution

Mr. Hayman: asked the Minister of Transport and Civil Aviation what evidence his Department has from local authorities concerned of the cost incurred by them in clearing beaches of oil residues.

Mr. Molson: I am aware that expenditure has been incurred by local authorities in clearing oil residues from beaches, but I do not know how much.

Mr. Hayman: Will the hon. Gentleman's Department collect such evidence, because all the arrangements now being made to deal with this nuisance are of a long-term nature, whereas the pollution of the beaches is a vital matter here and now, and many local authorities are saddled with very heavy expenditure?

Mr. Molson: I should not be willing to ask the local authorities about their expenditure upon this matter. It would only lead them to ask us to make a contribution towards it, and the Ministry of Transport has no funds available for that purpose. As I indicated last week, my right hon. Friend has called an international conference for early next year with a view to putting into effect the recommendations of the Committee on the Prevention of Pollution of the Sea by


Oil. If we are able to get agreement upon that, this very serious problem will then be solved.

Mr. G. Wilson: Can my hon. Friend devise any means whereby his Department might assist local authorities to deal with this very difficult menace?

Mr. Molson: We should naturally be willing to consider any suggestions which my hon. Friend cares to put forward, provided that it does not involve State expenditure.

Mr. Hayman: As the Joint Parliamentary Secretary's answer was so unsatisfactory, I give notice that I shall raise the matter on the Adjournment at the earliest possible opportunity.

VISITING FORCES (STATUS)

Mr. Wood: asked the Secretary of State for Foreign Affairs when Her Majesty's Government will ratify the agreement regarding the status of forces of parties to the North Atlantic Treaty.

Mr. Collick: asked the Secretary of State for Foreign Affairs when he anticipates an agreement being reached with the Government of the United States of America, whereby members of the United States armed forces committing offences in Britain will be subject to the criminal and civil law of this country.

The Joint Under-Secretary of State for Foreign Affairs (Mr. Anthony Nutting): Before Her Majesty's Government can ratify the North Atlantic Treaty Organisation Status of Forces Agreement, the Visiting Forces Act, 1952, must be brought into force by Orders in Council made under the Act. Her Majesty's Government intend to present these Orders to Parliament at an early date. The provisions of the Visiting Forces Act will then apply. American and certain other N.A.T.O. forces in this country will then be subject to the jurisdiction of British criminal courts except in respect of offences committed on duty or against the persons or property of other members of the American forces or against the property of the American authorities. Members of the United States forces are already subject to the jurisdiction of our civil courts.

Mr. Wood: When the Visiting Forces Act comes into operation and this Agreement also comes into operation, am I right in thinking that any offence committed by a member of a visiting force when off duty can be dealt with in a court in this country?

Mr. Nutting: When the Visiting Forces Act comes into force, any member of any armed forces specified in the Order in Council bringing the Act into force will be subject to British criminal jurisdiction, except in the cases I have mentioned in my original answer.

Mr. Collick: Is the Minister aware that where a British court makes an affiliation order against an American soldier it is not enforceable, and will the reply he has given cover that position? It does not appear to.

Mr. Nutting: I should like notice of that Question. As I understand it, the position is quite clear with regard to criminal jurisdiction, but in regard to a matter of that kind I should like to see a Question on the Order Paper.

Mr. Collick: If I understand his reply aright, the hon. Gentleman said that the present position covers civil cases. My information is that affiliation court orders by British courts are not enforceable against United States personnel, and that is the point I am raising.

Mr. Nutting: If I may say so, that is all the more reason why I should like to see a Question on the Order Paper, when the hon. Gentleman may receive a perfectly clear and straightforward answer.

Mr. Fletcher-Cooke: Is my hon. Friend aware that in the case of committal orders for civil debt many county court judges refuse to enforce them against visiting service personnel on the grounds that it is against the spirit of the Visiting Forces Act. Is that the considered view of the Foreign Office in this matter?

Mr. Nutting: The Act, as I have made plain, is not yet in operation.

Mr. S. Silverman: Will the hon. Gentleman recall the specific assurance given by his right hon. and learned Friend the Home Secretary when this Bill was in Committee and on Second Reading,


that the Order in Council bringing the Act into operation would not be promulgated until it was clear that reciprocal arrangements were being accepted by the United States Government in their own territories? Are we to take his announcement now as meaning that this assurance has been given?

Mr. Nutting: As the hon. Gentleman knows, the United States have ratified the Status of Forces Agreement and the Home Secretary made an explanation at some length to the House last night, which was accepted by the right hon. Gentleman the Member for South Shields (Mr. Ede). We awaited the ratification of this Agreement by the United States before bringing this Order before Parliament. We hope to bring it before Parliament shortly.

Mr. Ede: Will the hon. Gentleman read what his right hon. and learned Friend said yesterday afternoon, because it would appear from that that there is no satisfactory answer yet regarding the question of reciprocity.

Mr. Beswick: Is the hon. Gentleman aware that authorities responsible to the Government, controlled by the Government, are tendering advice to citizens in this country that although in theory they have redress in a civil court, in practice, the difficulty of carrying out such an order makes it not worth the expense incurred?

Mr. Silverman: In view of the unsatisfactory nature of some of the replies which have been made, I beg to give notice that I shall seek an opportunity to raise this matter on the Adjournment.

PERSIAN OIL NATIONALISATION (BRITISH RECOGNITION)

Mr. Fenner Brockway: asked the Secretary of State for Foreign Affairs if Her Majesty's Government recognises the legality of the nationalisation of oil in Persia in the same terms as stated by the preceding Government at the time of the Mission of the right hon. Member for Ipswich to Teheran.

The Secretary of State for Foreign Affairs (Mr. Anthony Eden): The present Government, as I understand their predecessors also, are prepared to recognise the

principle of the nationalisation of oil in Persia within the framework of an arrangement which, on the basis of justice and equity, satisfies the interests of the parties concerned.

Mr. Brockway: While appreciating that answer, may I ask the right hon. Gentleman whether he will make it known in Persia, where there seems to be some doubt about it?

Mr. Eden: I think that it would go rather well in Persia.

Mr. Stokes: May I ask the right hon. Gentleman whether he means that in fact what Her Majesty's Government now recognise—still recognise—is what we know as the March nationalisation law and that they do not yet accept the April nationalisation law, because that has an essential difference in Persia?

Mr. Eden: I have been very careful in my answer. As the right hon. Gentleman knows, there are considerable legal complications in this matter. As I understand the position, certainly neither this Government nor, from my researches through the documents, the previous Government have recognised the legality of the action hitherto taken by the Mossadeq Government. What we have said, and what I repeat now, is that we recognise the principle of nationalisation of oil subject to certain conditions being fulfilled.

Mr. Stokes: Yes, Iknow, but, for the purpose of clarification, will the Foreign Secretary say that that in effect means the acceptance of the March law in Persia and not the acceptance of the April law, which is a very different one? The whole of the negotiations in 1951 were carried out on the basis of the March nationalisation law.

Mr. Eden: The matter is slightly more complicated than that. The nationalisation matter is inevitably connected with the question of compensation. Now that I am embarking on these new negotiations with the Persian Government I do not think that it is desirable to raise that in an acute form, but I have to safeguard our national position and that of the company, and that is why I used the words which I have employed.

ICELANDIC FISHERIES DISPUTE

Mr. Osborne: asked the Secretary of State for Foreign Affairs what answer he has sent to the petition signed by nearly 1,000 Grimsby trawler men's wives and organised by Mrs. Irene White, 72, Daubney Street, Cleethorpes, which asked him to take decisive action to settle the Icelandic fishing limits dispute, since it may make it impossible for British trawlers to make a living in Icelandic waters and cause unemployment and distress in the Grimsby district.

Mr. Nutting: I replied to Mrs. White on behalf of my right hon. Friend on 23rd November; and will send my hon. Friend a copy of my letter.

Mr. Osborne: Is the hon. Gentleman aware that there is considerable anxiety in the district that this dispute has lasted so long? Is there anything he can do to break the deadlock? Is he aware that the matter is causing considerable anxiety to the traders and to the whole people of Grimsby and district? Is there any hope that the dispute may be settled in the near future?

Mr. Nutting: As my hon. Friend knows, we have made many propositions to the Icelandic Government for taking this matter to the International Court, for direct talks between Governments and for direct talks between the trawling interests, and we have made proposals through diplomatic channels. All these have either been rejected or frustrated by the Icelandic Government. Should any further ideas occur to the Government we shall, of course, try them out. Meanwhile, we think that the Icelandic Government might make a proposal.

Mrs. Braddock: Will the hon. Gentleman give an assurance that the Foreign Office are not being held to blackmail by the Trawler Owners' Association?

Mr. Osborne: Nonsense.

Mrs. Braddock: Can the hon. Gentleman give some explanation of the fact that on 26th October a fish merchant in Grimsby asked the representative of the Grimsby Trawlers Owners' Association why the Foreign Office was not doing more in this matter and the amazing reply he received was, "Because we will

not let them"? Can the hon. Gentleman give any explanation of that position?

Mr. Nutting: The Government are not being held to blackmail by the trawling industry, nor are they responsible for the answers which individual trawler owners or fishermen may give.

GERMANY (OCCUPATION COSTS)

Mr. E. Fletcher: asked the Secretary of State for Foreign Affairs what arrangements have been made with the Federal German Government for the payment of the British occupation costs after the end of the present year.

Mr. Nutting: As long as the occupation régimeis in force, the Federal German Government meet the local costs of the British occupying forces in accordance with their requirements. We are at present discussing with the Federal German Government our requirements for the period after the end of the present year.

Mr. Fletcher: As it is now very doubtful whether the European Defence Agreement will be fully ratified, may we have an assurance that next year there will be no reduction in the present contribution of the Germans towards the cost of the British occupation forces?

Mr. Nutting: As the Chancellor of the Exchequer said on 7th May, 1953, arrangements have been made to ensure that the cost of our troops in Germany will be covered between the date of ratification of the Bonn Convention and the E.D.C. Treaty—which are to be ratified simultaneously as the hon. Gentleman knows—and 30th June, 1954. Thereafter, of course, German defence contributions will be assessed in the same way as that adopted in N.A.T.O. But if the occupation régime should still be in force on 30th June, 1954, then, of course, the existing arrangement will still apply.

CHINA (AMERICAN TRADE)

Mr. Wyatt: asked the Secretary of State for Foregin Affairs whether he will publish the report he has received from


Her Majesty's Ambassador in Washington on the extent of American trade with Communist China.

Mr. Nutting: The extent of American imports from China in 1952 and the first quarter of 1953 is set out in a memorandum issued by the United States Department of Commerce, a copy of which I am sending to the hon. Member. I am informed that during this period there have been no American exports to China.

Mr. Wyatt: As the Americans bought 28 million dollars' worth of goods from China in 1952, which represents nearly 10 times as many goods as we bought from China, and as dollars are the most valuable war potential now in existence, should not the British Information Services in Washington be instructed to inform the American public that, far from Britain being the only country to trade with China, America has been of far more assistance to Communist China than we have?

Mr. Nutting: So far as I am aware there has been no attempt by the American Government to conceal this fact. [Hon. Members: "Oh."] I said by the American Government. This is a statement issued by the United States Department of Commerce which, so far as I am aware, is available to the whole of the nation, just as I am making it available to the hon. Member.

Major Beamish: Will my hon. Friend arrange to put in the Library a copy of Mr. Harold Stassen's last report to Congress which contained all the relevant information about this matter, including all the figures sought by the hon. Member for Aston (Mr. Wyatt), and also a full record of the trade of Britain with China?

Mr. Nutting: I will certainly do that.

KOREA (JOINT POLICY DECLARATION)

Mr. Warbey: asked the Secretary of State for Foreign Affairs whether his attention has been drawn to the discrepancy between the terms of the 16-nation declaration on Korea, and the provisions of the United Nations Charter for dealing with threats to, or breaches of, the peace; and whether he will take steps to have the 16-nation declaration suitably amended.

Mr. Nutting: No, Sir. The joint policy declaration is in no way inconsistent with the United Nations Charter. The second part of the hon. Member's Question does not therefore arise.

Mr. Warbey: May we take it from that reply that in the event of any incidents occurring in Korea likely to lead to a breach of the peace, whether it comes from the Communists or from Syngman Rhee, the first act of the Government would be to refer the matter to the Security Council of the United Nations for investigation and action?

Mr. Nutting: The hon. Gentleman can take it from that reply that the Security Council resolution of 27th June, 1950, is still in force and that all that the 16 nations have done in their declaration is to announce that if the aggression were to be renewed their own resistance to aggression would be renewed also. In the event of a breach of the armistice from the South Korean side the Government are in no way committed to any action.

U.N. TECHNICAL ASSISTANCE BUDGET

Sir R. Acland: asked the Secretary of State for Foreign Affairs what instructions were given to the British representative attending the recent United Nations Committee to consider the size of the Budget for the United Nations Technical Assistance Programme for 1954; whether the size of the Budget has now been determined; and what will be the British contribution.

Mr. Nutting: The programme for 1954 must depend on the funds available. It will be worked out by the Technical Assistance Board, on which Governments are not represented. The pledges made by contributing Governments amount so far to $23·7 million. The size of the programme for 1954 has not yet been announced, and will depend on whether pledges are made by other countries. As regards the contribution of Her Majesty's Government, I would refer the hon. Baronet to the reply given to the hon. Member for Blackburn, East (Mrs. Castle) on 11th November.

Sir R. Acland: The hon. Gentleman has not answered the first part of my Question. Is he aware that the Press


release of the conference shows that the British representative there did not make any suggestion that the countries of the world should increase the size of the programme, and, indeed, denied that any financial difficulties were involved? Was that done on the instruction of the Government, or was it on the British representative's own responsibility?

Mr. Nutting: It is not for Her Majesty's Government to lecture other Governments in this matter. It is for Her Majesty's Government to set an example, and we set an example by increasing our contribution by 20 per cent.

Sir R. Acland: Owing to the very unsatisfactory nature of the reply, I give notice that I shall raise the matter on the Adjournment.

EGYPT (SUEZ CANAL NEGOTIATIONS)

Mr. Wyatt: asked the Secretary of State for Foreign Affairs whether he will make a further statement on the Suez Canal negotiations with the Egyptian Government.

Mr. Eden: I have nothing at present to add to what I said on this subject in the course of the debate on the Address, except to say that, as the House will already be aware, Sir Ralph Stevenson, Her Majesty's Ambassador in Cairo, will shortly be returning to Cairo. General Sir Brian Robertson has now returned to this country to take up his duties as Chairman of the Transport Commission. I should like to take this opportunity of expressing the gratitude of Her Majesty's Government to General Robertson and of paying him a personal tribute for the part he has played in these negotiations.

Mr. Wyatt: Is it not the case that these negotiations are now being held up on two very narrow points, first, what clothes the technicians who are to remain behind in the Canal Zone shall wear, and, second, what conditions would precede availability of the base to us again in the event of war? Are we not missing a great opportunity to sign the agreement with the Egyptians while General Neguib can still hold the nationalist element under control, merely because the Foreign Secretary has become afraid of 25 Tory back benchers?

Mr. Eden: The hon. Gentleman can, of course, use his imagination as to the reasons for the attitude of Her Majesty's Government. However, the issues upon which we are at present divided will, I trust, be resolved. I cannot for a moment admit that one of them in particular is other than of major importance.

Mr. Speaker: rose—

Captain Waterhouse: On a point of order. This is an extremely important subject, Mr. Speaker. Might not one supplementary question be allowed from this side of the House?

Mr. Speaker: I am afraid not now. These are all very important subjects.

TRIESTE AND ROME (RIOT DAMAGE)

Mr. Mott-Radclyffe: asked the Secretary of State for Foreign Affairs what damage has been caused to British property or suffered by British persons during the recent riots in Trieste and Rome.

Mr. Nutting: I am glad to say that there were no injuries to British persons either in Trieste or Rome during the recent incidents. As regards damage to property, in Rome windows were broken at the Consular Section of Her Majesty's Embassy, and at the offices of British European Airways and of the British Council. The total amount of the damage is estimated at £100. At Trieste windows were broken in three hotels, one service club and one forces cinema, all under military requisition. Fourteen military vehicles were damaged, one of which is a complete wreck. The total damage is estimated at £536.

Mr. Mott-Radclyffe: Can my hon. Friend say whether any claim for damages has been lodged by Her Majesty's Ambassador against the Italian Government?

Mr. Nutting: With regard to damage in Rome, we have reserved the right to claim compensation for damage to British property, which, as I said, amounts to about £100. Since Trieste is under Allied Military Government, the question cannot arise there.

Mr. Noel-Baker: Is it not the case that the riots were organised by neo-Facist agents, and was not the major damage that done to Italian interests and reputation?

Mr. Nutting: My right hon. Friend dealt with that matter in his statement on 9th November. I have nothing to add to what he said.

AVRO VULCAN BOMBERS (U.S.A. MAGAZINE ARTICLE)

Mr. Dodds: asked the Secretary of State for Foreign Affairs in view of the top secret information that has been revealed in a United States magazine which in this country is forbidden under the Official Secrets Act, details of which have been supplied to him by the hon. Member for Dartford, what approach has been made to the United States of America suggesting the setting up of machinery designed to obviate the divulging of highly confidential information.

Mr. Nutting: Arrangements exist for safeguarding confidential information exchanged between Her Majesty's Government and the United States Government. In the case which the hon. Gentleman has in mind the article was written by a private individual on the basis of information which has already been released in this country. Such a case does not therefore seem to call for additional security arrangements between the two Governments.

Mr. Dodds: How can the hon. Gentleman reconcile what he now says with the answer I got from the Minister of Supply on Monday, which stated:
Some of the information in the magazine in question is of a kind which would not have been published in the British Press."—[Official Report, 23rd November, 1953; Vol. 521, c. 5.]
That was a reply to a Question about the Official Secrets Act. In view of the fact that this man, who goes under the the pen-name of Peter Scott, was Assistant chief designer at A. V. Roe, The Gloucester Aircraft Co. and De Havillands and has some of our most guarded secrets, is not something going to be done about it, particularly when America has witch-hunters to prevent secrets going to friend and foe alike?

Mr. Nutting: The hon. Gentleman suggests that additional security machinery should be set up. Arrangements already exist for safeguarding information exchanged between the two Governments. I do not see how this case could be covered by any additional machinery.

Mr. Speaker: Mrs. White.

Mr. Dodds: On a point of order. I should like your guidance, Mr. Speaker. The hon. Gentleman mentioned that the information which I queried has appeared in this country, whereas his right hon. Friend said that some of this information has not been disclosed and would not be disclosed in this country.

Mr. Speaker: That is not a point of order for me. The answer may be unsatisfactory to the hon. Gentleman and he must take some steps to raise it again if he thinks fit. I am afraid I cannot allow too much time to be taken on one Question. Weare proceeding very slowly. If the hon. Gentleman will look at the clock he will see how long it has taken us to reach Question No. 40.

Mr. Dodds: In view of the unsatisfactory nature of the reply, I shall raise the matter on the Adjournment.

Mr. Elliot: Further to that point of order. Is it not clear that the machinery for raising matters on the Adjournment is falling into hopeless confusion? Would it not be desirable for this matter to be reviewed again by you, Mr. Speaker, in view of the changed circumstances of the present time?

Mr. Speaker: That is a very large question. I have been thinking about it, and I shall be very grateful for suggestions from hon. Members.

Mr. Stokes: Is the fault not a matter of raising subjects on the Adjournment but of hon. Members on both sides of the House being far too long-winded in their supplementary questions?

Mr. Speaker: I have frequently, in my own way, tried to suggest what the right hon. Gentleman has just said. There seems to be a misconception among some hon. Members that one can debate Questions. Questions are for extracting information. A Question should be left to


the hon. Member who asks it; it is his hare and he should be allowed to hunt it.

Mr. I. O. Thomas: You say, Mr. Speaker, that one of the purposes of a Question is to extract information. What is the position if the information cannot be extracted?

Mr. Speaker: The hon. Member must try again.

EUROPEAN COAL AND STEEL AUTHORITY

Mrs. White: asked the Secretary of State for Foreign Affairs if he has yet received the proposals for the closer association of the United Kingdom with the European Coal and Steel Authority prepared by the committee under the chairmanship of M. Monnet.

Mr. Nutting: No, Sir.

Mrs. White: Can the hon. Gentleman give an assurance that we shall not enter into further commitments relating to the very important industries of coal and steel without having a full discussion in the House?

Mr. Nutting: I cannot give such an assurance, but, of course, we have not yet received M. Monnet's proposals and we should like to study them first.

Mr. Bottomley: Has this matter been held up by Her Majesty's Government, or are other Powers responsible for the delay?

Mr. Nutting: So far as I know, there has been no delay. M. Monnet has told us that he will shortly be sending us some proposals. We hope to get them fairly soon.

EUROPEAN DEFENCE COMMUNITY (SOVIET NOTE)

Mr. Warbey: asked the Secretary of State for Foreign Affairs what reply he proposes to make to the Soviet Government's request for a clarification of the attitude of Her Majesty's Government towards the taking of steps to ratify the European Defence Community agreements during the time when a Four-Power Conference on Germany is under consideration.

Mr. Eden: I would refer the hon. Gentleman to the Note presented to the Soviet Government on 16th November, the text of which was laid before this House on 17th November, in Command 9008.

Mr. Warbey: Surely the right hon. Gentleman is aware that this point, probably the key point in the Soviet Note, is evaded in the reply? Will the right hon. Gentleman adopt the very sensible view put forward by the Opposition that any further steps towards German re-armament should be held in suspense until and after a conference with Russia has been got under way?

Mr. Eden: I did not know that it was the view of Her Majesty's Opposition that we had in our reply in any way evaded the issue. On the contrary, our reply is absolutely plain and has been made public, though not in Russia so far. I made plain in that statement and in the House that we, for our part, are prepared to discuss Germany and Austria with the Soviet Government at any time at any place and without any prior conditions at all. If Russia will do the same, she can meet us tomorrow.

SPAIN (U.S.A. BASES)

Mr. Warbey: asked the Secretary of State for Foreign Affairs what consultations he has had with the United States Government regarding the participation of Spain in Western Defence plans.

Mr. Eden: The United States Government kept us continuously informed regarding their negotiations for the recent United States Spanish bases agreement.

Mr. Warbey: In any further discussions with the United States Government on this matter, will the right hon. Gentleman represent to the United States the view widely held in this country that any participation of Franco's Government in Western Defence, either through the front door of N.A.T.O. or through the back door, is regarded with abhorrence and makes a mockery of the view of N.A.T.O. that we are fighting for a democratic cause?

Mr. Eden: Her Majesty's Government saw no reason for objecting to the conclusion of this arrangement, and, on the


contrary, I should have thought that the House would have felt that the existence of other bases besides those in this country would not be entirely disadvantageous to this country.

E.D.C. (BRITISH ASSOCIATION)

The following Question stood upon the Order Paper:

Mr. Wyatt: To ask the Secretary of State for Foreign Affairs whether he will make a statement on the agreement with the French Government whereby Britain will move into closer association with the European Defence Community than previously announced by Her Majesty's Government.

At the end of Questions—

Mr. Wyatt: On a point of order. May we have a reply to Question No. 52, please? I ask this question because I think it raises an important constitutional point. M. Bidault, the French Foreign Minister, made a long statement in the French Parliament last week describing

Mr. Speaker: In answer to the hon. Member's point of order, so far as it is a point of order, as far as I am aware, I have received no request that Question No. 52 should be answered, and the time for Questions is now over. I am sorry to have to rule that, but, to some extent, these things are not in my control.

Mr. Wyatt: Further to that point of order. What is our position when announcements are made about the British Government's policy in the French Parliament which are not made in this House and to which we have no reply?

Mr. Speaker: The hon. Member must use what Parliamentary opportunities he can get.

Sir H. Williams: Further to that point of order. May I have an answer to my Question No. 82?

ROYAL NAVY CADETS (NEW ENTRY SCHEME)

The following Question stood upon the Order Paper:

Mr. H. BROOKE: To ask the First Lord of the Admiralty whether he will

make a statement about Cadet Entry to the Royal Navy.

At the end of Questions—

The First Lord of the Admiralty (Mr. J. P. L. Thomas): With your permission, Mr. Speaker, and that of the House, I should like to answer Question No. 95.
The House will recall that the Report on Cadet Entry into the Royal Navy which was published as a Command Paper and debated on 6th July dealt especially with the age at which boys should enter as cadets. I have considered it with great care in the light of advice I have received from the naval authorities concerned and from representatives of educational opinion.
The overriding need is to establish a system of cadet entry into the Royal Navy which not only gives the Navy adequate numbers of cadets of the required standard but also conforms beyond dispute with the general trend of educational policy and is entirely outside the field of controversy. I have accordingly decided that all cadets of the permanent entry should join the Royal Navy in one age group at about 18. The first open written examination under this scheme will be held in October, 1954, for entry in May, 1955. The last open written examination for entry at 16 will be in June, 1954, for entry in January, 1955.
An immediate review is being undertaken of officer training as a whole to meet the new conditions and the scientific and technical advances of our day. Whatever conclusions may emerge from this review, I have no personal doubts that the Britannia Royal Naval College, Dartmouth, will have an important place in naval training as it has had since its inception 50 years ago.

Mr. Brooke: Is my right hon. Friend aware that this plan will be judged by one thing—whether it does, in fact, produce the requisite number of first rate officers for the Navy, and that everybody will hope that his announcement will put a stop to this unhappy period when this very important question has become mingled with party politics? Could he tell the House what arrangements he is making for the present admirable staff at the Royal Naval College?

Mr. Thomas: I can assure my hon. Friend that this decision will give the


Royal Navy the adequate supply of first class candidates which it needs. This has obviously been my prime consideration throughout, but if, at the same time, it raises the matter above political controversy, it would be of inestimable benefit to the Royal Navy, and I believe to the country as a whole. In reply to my hon. Friend's question about the staff at Dartmouth, I should like to place on record how grateful we feel to all the staff, and above all the civilian masters, many of whom have devoted most of their lives to the education of naval cadets. I am not, of course, able to speak about their prospects of further employment after the Royal Naval College has ceased to be a college for naval cadets of school age, but I can assure the House that this question is one which will receive the most careful and sympathetic attention.

Mr. Callaghan: May I ask the First Lord if he agrees with his hon. Friend that this has been a question of party politics—[Hon. Members: "Yes."]—or whether it has not been a question of finding the best solution for the Royal Navy? May I further ask him if he would take note that, in our view, he is approaching a solution if he feels it necessary to abolish the 16-year-old entry, which will remove this question from the sphere of political controversy—which is a quite different matter from party politics—and will lay a foundation for long-term permanent recruitment to the Royal Navy? Finally, may I ask him whether, in view of the scheme announced by the R.A.F. last week for giving free entry scholarships to young men between 16 and 18 to enter the R.A.F. at the age of 18, he has in mind giving the same sort of opportunities to young men who desire to enter the Royal Navy?

Mr. Thomas: I said in my original answer that I think this Question has been one of controversy—not party political controversy—but controversy in all quarters, both in the political and educational worlds, and I hope and believe that this decision will raise it above that controversy. I quite realise that there will be certain boys who will wish to join the Navy at 16 and who now have to wait until 18. It may be difficult for their parents to keep them at school during that period, and I have that very much in mind. Amongst other

proposals, I shall consider in due course what my right hon. Friend the Secretary of State for Air has done as far as air cadets are concerned.

Captain Ryder: In welcoming the statement by my right hon. Friend, which appears to hold out a prospect of a permanent solution as far as the best age of entry is concerned, may I ask him if he can consider the question of a system of scholarships similar to that announced by the Royal Air Force?

Mr. Thomas: I have just said that that is definitely one of the proposals which I shall take into consideration when I come to look at the question of boys of 16 whose parents are not able to keep them at school until they are 18.

Mr. W. J. Edwards: While I am very glad that the First Lord has resisted the pressure to re-introduce the 13-year-old entry, may I ask him whether this is going to interfere with the age at which cadets are able to become midshipmen, and with their further progress as far as the Royal Navy is concerned?

Mr. Thomas: As I said in my original answer, there is a review being held into cadet training at the present time to bring it up to date with the scientific changes that are happening in the world at the moment, and that will be one of the questions to be considered by this committee, which is going into the matter immediately.

Sir H. Williams: On a point of order. As we have taken nine minutes on the answer to one Question, and as a lot of other Questions have not been answered, is it not time that we stopped these Ministerial statements at the end of Questions?

Mr. Speaker: I think we had better stop now.

Brigadier Rayner: On a point of order. In view of the fact that Dartmouth is in my constituency, may I be allowed to put a supplementary question?

Hon. Members: No.

Mr. Speaker: Order. If the hon. and gallant Gentleman has a point which interests his constituency, he can take it up with the Minister by correspondence.

Oral Answers to Questions — BALLOT FOR NOTICES OF MOTIONS

DENATIONALISED STEEL UNDERTAKINGS (SHARES)

Mr. J. Hynd: I beg to give notice that, on Friday, 11th December, I shall call attention to the terms and conditions for the issue of shares in the denationalised steel undertakings, and move a Resolution.

COMPANY DIVIDENDS

Mr. Roy Jenkins: I beg to give notice that, on Friday, 11th December, I shall call attention to the recent increases in company dividends, and move a Resolution.

RETIRED OFFICERS' PAY

Sir Edward Keeling: I beg to give notice that, on Friday, 11th December, I shall call attention to the retired pay of certain serving officers, and move a Resolution.

BILL PRESENTED

ELECTORAL REGISTERS BILL.

"to alter the date for the publication, in the year nineteen hundred and fifty-five and subsequent years, of registers of parliamentary and local government electors, and consequentially on that alteration to alter the elections for which those registers are to be used, and the qualifying date for those elections, and make further provision in place of section four of the Electoral Registers Act, 1949," presented by Sir David Maxwell Fyfe; supported by Mr. James Stuart; read the First time; to be read a Second time To-morrow, and to be printed. [Bill 39.]

BUSINESS OF THE HOUSE

Proceedings on Government Business exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[The Prime Minister.]

Orders of the Day — LOCAL GOVERNMENT (FINANCIAL PROVISIONS) (SCOTLAND) BILL

Order for Second Reading read.

3.42 p.m.

The Secretary of State for Scotland (Mr. James Stuart): I beg to move, "That the Bill be now read a Second time."
I may fairly claim that the Bill is the most complicated Measure which I have yet had to contemplate. What I must endeavour to do as simply as I can, and this is not an easy task, is to explain the main alterations which the Bill proposes to make in the present equalisation grant arrangements.
As the House is aware, the present arrangements were made by Part II of the Local Government Act, 1948. This Act put an end to the old block grant system and substituted for it a system of equalisation grants, that is to say, a system under which the rating resources of local authorities which fall below a certain average, measured in terms of rateable value per head of weighted population, are made up to that average. In Scotland, under the 1948 Act we have been receiving 25 per cent. in addition to the average for England and Wales, but this 25 per cent. was strongly contested at the time, and since then both my predecessor in office and I have been pressed to have it reviewed.
After consideration and discussion with the local authority associations, I agreed in March, 1952, that an investigation should be carried out. A committee was set up consisting of representatives of the three main associations and of my own Department, and was asked to give priority to the question whether the 25 per cent. addition to the England and Wales average was fair to Scotland and was adequate. The Committee submitted an interim Report in January, 1953, and advanced strong arguments that the 25 per cent. is not adequate; but it was unable, owing to the lack of uniformity of valuation in England and Wales, to propose any precise measure of the difference between the levels of value in the two countries.
It therefore proposed that, pending revaluation in England and Wales, the


Scottish grant should be reckoned as the Goschen equivalent of the English and Welsh grant, that is to say, eleven-eightieths of the England and Wales total. I should also mention that the fact that the committee under Lord Sorn had been set up to investigate the system of rating and valuation in Scotland, naturally influenced the committee, which came to the conclusion that some interim adjustment was best at this time. The local authority associations unanimously supported this view, and I announced in this House last July that the Government accepted it.
Therefore, Clause 1 of the Bill proposes that from 16th May last the total equalisation grant payable to Scottish local authorities shall be eleven-eightieths of the English grant. This will mean a benefit to local authorities in Scotland of approximately £2 million in the year, or a little above that figure; or to put it in other words, it is an increase of approximately one-third in the present total grant. I hope that this interim adjustment, which is acceptable to local authorities, will commend itself to this House also.
The Committee next considered how the grant should be distributed. The final Report was presented to this House on 11th November of this year. After discussion with local authorities the Government decided to carry out the recommendations of the investigation committee, with one important modification to which I will refer later. I believe that the decision is acceptable to the County Councils Association and to the Convention of Royal Burghs, but not to the counties of cities.
Before dealing with the changes that the Committee proposed, I should perhaps refer briefly to the present method of distribution of grants. First of all, the amount of grant is calculated for each city and large burgh, and for each county inclusive of the small burghs in the county, so as to produce the same amount of revenue as the area would have had if its rateable value per head of the weighted population had been equal to the national average. The county grant having been determined, a capitation grant is then paid out of it, or out of the rates if there is no grant or not sufficient grant. It is paid to the town council of each small burgh and to each

county council for the benefit of the landward area.
This capitation grant is arrived at by multiplying a fixed sum by the population of the area concerned. For the landward areas, this fixed sum is two-thirds of that for the burghs. The Committee decided not to recommend any change in the basic principles of the equalisation grant. For the Committee's reasons for this advice, I would refer hon. Members to page 10, paragraph 26, of its Report.
The Committee then proceeded to deal with the method of distributing these increased grants, which naturally affect many authorities and mostly for the better. As regards the others, the authorities which would not gain, we shall propose certain safeguards to which I will refer shortly. Before dealing with these changes, I must deal with one or two other somewhat complicated points. One result of using the Goschen formula is that we must fix a new standard up to which the rating resources of Scottish authorities are brought by equalisation grants. This is dealt with in subsections (2) and (4) of Clause 4 of the Bill. I admit that it is a complicated matter, but I am assured that it is capable of being carried out.

Mr. James Mclnnes: By whom?

Mr. Stuart: I do not necessarily undertake to carry out the calculations myself, if the hon. Gentleman will excuse me.
This new standard, or "constant factor" as it is called in the Bill, must be of an amount to ensure that the total grant is actually expended.
Of the other main changes proposed by the Committee, the most important is the proposal that capitation grants should be discontinued, and that, instead, the grants should be calculated separately for each burgh, large or small, and for each land ward area by reference to its own resources and to the amount for which the council concerned would have to rate.
This change will operate as from 16th May, 1954, and is dealt with in Clauses 3 and 5 of the Bill. The Committee felt, and I think rightly, that if the principle of equalisation grant is accepted, it is logical and fair that its amount be related to the commitments of each rating area.


and not determined, as at present, partly by reference to such circumstances and partly, in the counties and small burghs, by reference to an amount per head which takes no account of local needs.
In conjunction with this, the Committee further proposed that where expenditure has to be shared among authorities, that is to say, between the landward area and the burghs in a county, the allocation should be made, not as at present on the basis of actual rateable value, but on the basis of actual rateable value plus the notional rateable value, if any, credited to the area for the purpose of calculating the equalisation grant.
The reason for using this standard rateable value is that the grant is really the rates payable on the credited rateable value, and it is logical, and I think fair, that if the State is, in effect, a ratepayer, the value on which it pays rates should be taken into account like other rateable value, when expenditure is being apportioned. In the same way, it is proposed to take account of this credited rateable value in sharing out the payments made to local authorities in lieu of rates by the British Transport Commission and by the Electricity Authorities. Effect is given to these proposals in Clauses 10 and 11 of the Bill. Similarly, though it is not dealt with in the Bill, the rate deduction made in calculating the education grant will be calculated on the actual rateable value plus credited value, if any, of the area concerned.
These new provisions cannot, of course, come into full effect until the next local authority financial year, because the requisitions for the current year have already been made on the old basis. Transitional arrangements for the current year are therefore necessary, and these are dealt with in Clause 2. Broadly, the proposal for 1953–54 is to calculate grant on the new basis for each large burgh and for each county, including the small burghs, and then to share out the county grant between the landward areas and the small burghs in proportion to their expenditure.
There are two other changes to which I wish to refer. First, Clause 4 (3) proposes an amendment of the formula for calculating weighted population so as to take account of the additional burdens placed on areas with expanding populations, that is to say, new mining areas.
If hon. Members will turn to the examples given, they will see that they refer to areas such as Clackmannan and Midlothian.
Secondly, in working out the equalisation grant, we propose to take for all local authority houses a notional rent equal to the average rent of such houses for the country as a whole. At present, the grant varies with the rent which any local authority chooses to fix for its houses; but under Clause 4 (1) of the Bill an authority is free to fix the rent it thinks right in the knowledge that the grant will be unaffected.
Further, under Clauses 8 and 9 we propose, as recommended by the Committee, that each district council should receive a share of the county's grant proportionate to its expenditure. At present these district councils receive no direct grant, and it seems not unreasonable that they should. These changes, of course, affect the rates of many authorities, and I would call the attention of hon. Members to the illustrations given in the White Paper of the effects upon local authority rates.
As a result of the proposals, there will generally be a substantial gain for the country, but there are, I admit, some areas where there would be a loss unless special provisions are made. The investigating Committee recommended that in the current year any such loss should be made up in full and in future years to the extent that it exceeded the produce of a rate of 1s. in the £. But the Bill proposes to modify the Committee's recommendation, and we think it reasonable that, until we have experience of the new system, local authorities should be safeguarded against loss.
Clause 6 of the Bill provides for this by transitional grants to compensate local authorities for any loss. These transitional grants should not greatly exceed £200,000 in a year, and will be the first charge on the total Scottish grant of some £8 million. Even at the risk of repetition, I think that I must make it clear that these arrangements are definitely of a transitional character. There are some, I know, who hold that the system of equalisation grant is unsound, but to those critics I would say that they should study the Committee's Report and realise the difficulties of achieving agreement on an alternative system to this.
I suggest to the House that it would be better to stick to the present transitional arrangement pending two things—the revaluation of property in England, which is bound to affect the whole method of calculating grant, and, most important, the receipt of the Report of the Committee at present sitting under the chairmanship of Lord Sorn which is inquiring into the whole system of rating and valuation in Scotland. I think it would be most unwise to make any radical change in the system until we have a chance of studying that Report.
Therefore, we agree with the investigating Committee that the right course is to proceed on the lines which it advocated and which are in the Bill, but to regard the changes as interim, to watch carefully how they work, and to review them at the latest after receiving and considering the Report of the Sorn Committee. It will be noted that Clause 12 (2) of the Bill makes provision for review at any time, and not, as under the 1948 Act, after a five-year period.
Therefore, I can commend the Bill to the House, as, I repeat, an interim Measure, providing Scotland with an immediate and substantial gain, and as one which, while maintaining the principle of equalisation grants, provides a more logical and equitable method of distribution. I commend it also on the ground that no local authority will suffer, which is some comfort at least to those who do not actually gain, while the rest will gain. We will re-examine its working, in the light of experience, with local authorities, whenever that is felt to be desirable.
Finally, I should like to take this opportunity of saying how greatly indebted I am to the local authority associations for their friendly co-operation in carrying out this review, and to the local government officers who served on the investigating Committee. It was, I fear, a laborious task, certainly a highly complicated one, and it was carried through efficiently and impartially. All concerned displayed a sense of realism and a genuine desire to reach a fair settlement. I hope the House will permit me—and I believe that the Committee would agree with me—to take this opportunity of also expressing my thanks, and I think theirs, to the chairman for the admirable way in

which he carried through this very difficult task.

4.2 p.m.

Mr. Thomas Fraser: The Secretary of State has said that this is a complicated Bill. It is a most complicated Bill. He helped a little, I think, in assisting us to understand the Bill, though at one point I thought he made things a little more complicated. At the beginning of his speech he said that, under the 1948 Act, the provision for Exchequer equalisation grants was that, in Scotland, we would have a 25 per cent. grant in addition to that received by England and Wales. I know that he knows that is not so, but that is what he said.
Might I make clear, however, that we on this side of the House who had the honour of introducing the Bill that became the 1948 Act do not claim any responsibility for the parentage of the 25 per cent. In Scotland, it has been assumed for a very long time indeed—I do not know for how long—that our average rateable value was 25 per cent. above the average rateable value in England and Wales. That assumption has been made in many statutes over the years, and was continued in 1948.

Mr. Stuart: I should have said, of course, receiving the English average plus 25 per cent. If I left out the word "average" I must have departed inadvertently from the gospel according to St. Andrew's House.

Mr. Fraser: I am sure we are all grateful to the right hon. Gentleman.
It is quite obvious that no Scottish Member would dare to say that he opposes the Bill, which gives to Scotland an additional £2 million to aid the local authorities in the services they have to provide. As the Secretary of State has said, the provisions of the Bill are accepted by the local authority associations. Might I say, however, that if, as experience has shown, the average rateable value in Scotland is more than the 25 per cent. that has always been accepted, and that this old notion of ours is no longer acceptable, it is equally true to say that very many of us consider the Goschen formula to be a rather outmoded means of measuring the assistance to be given to Scottish Local authorities. It is not a very original idea, and I want to


make one criticism of it. The Goschen formula is not in any way related to the principle of Exchequer equalisation grants, which is that the central Government should give financial assistance to local authorities in accordance with the needs of those local authorities. They should help the local authorities as a ratepayer, to enable them to provide the local services for which they are responsible. If one accepts that principle, one cannot accept the Goschen formula as a long-term policy, and I think all of us will pay heed to the Secretary of State's promise that this, in fact, is an interim arrangement.
Might I give one further reason why, in this matter, the Goschen formula is not a long-term solution to the problem in Scotland? In Scotland we have areas which must inevitably attract a more generous grant from central funds, as a ratepayer, than any other part of the United Kingdom. One thinks of the whole of the Highlands and Islands—which have been treated generously, and rightly so, under the 1948 Act—where the rateable value per head of population has always been, and still is, deplorably low. The rateable value per head of population in that part of Scotland reduces very considerably the average rateable value per head of population in Scotland.
To give an example, we have 24,000 or 25,000 crofters in the Highlands. Those crofters in the main—I do not say all—pay their local rates, if they pay any at all, on the basis of the rateable value of the land that they hold as a croft. The land is very often got at an annual rental of 20s. a year. That is the rateable value—£1 a year. The improvements on the land, which include the crofter's house and any steadings or outbuildings he has, are not taken into account at all. There is no additional rateable value for improvements, so the total rateable value on which the crofter pays his rates is the 20s.
The crofter, however, enjoys the advantages of agricultural derating, so he is relieved of about 87½ per cent. of that £1. That means that, of that £1, his rating obligation to the local authority is 2s. 6d. a year. One can see that in such an area the responsibility of the central Government to contribute to local resources is greater than it can possibly be

in any other part of the country. If we were to accept the Goschen formula, as a long-term solution, we should be accepting the inevitability of that part of Scotland outwith the Highlands being held to be responsible for aiding the Highland local authorities, instead of making that a responsibility of the nation as a whole.
In July, in the Scottish Grand Committee, I ventured to suggest that it was a mistake to give the investigation to a committee of finance officers. With the greatest respect, I submit that the result of their investigations proves my contention. None of us is ungrateful to the officers for the work that they have done. We are sure that they worked hard and long and gave of their best in seeking a solution to the problem. The fact remains that they ought not to have been given the job to do.
If the investigation had been made by a committee of public persons of standing, such as the Secretary of State normally appoints to committees, we should have had quite a different report, and the Secretary of State this afternoon would not have had to give effect to their recommendations by a Bill which he said was the most complicated he had ever had to contemplate. It is a complicated Measure because it contains a set of proposals worked out by finance officers, proposals that cannot be understood by any member of a local authority, by any hon. Member of this House, nor, I suggest, by the Secretary of State for Scotland—nor even, I should think, by a great many finance officers.

Sir William Darling: I do not want the House to be misled. I think that I am right in saying that over one-third of the officers were town clerks and not finance officers, and that another one-third were officers from St. Andrew's House and elsewhere.

Mr. Fraser: I have the Report here and I think I am right in saying that a great many were finance officers. There were town clerks, county treasurers and the like and city chamberlains from the four cities, but in the main these people were finance officers. In any case, in proof of what I have been saying, I challenge the Secretary of State for Scotland or the Joint Under-Secretary to stand at the Dispatch Box and, without reading, tell us


what calculations the Secretary of State will employ to determine the "constant factor" which is set out in Clause 4 (4) of this Bill and, in consequence, the standard rateable value. The Bill makes it clear that the constant factor will be something that will be varied from year to year.
Previously, in the 1948 Act, the formula was written into the statute, but now it is a secret formula and it really ought not to be necessary to have a secret formula for the allocation of public money. The investigating Committee and the White Paper both propose that in place of the additional 25 per cent. to the standard rateable value in England and Wales there should be substituted such notional figure as will absorb the total of eleven-eightieths. Is it plain that for the current year it works out at any percentage? If so, what is that percentage? No document has so far told us what it is, and the Secretary of State has not told us today.

The Joint Under-Secretary of State for Scotland (Commander T. D. Galbraith): What does the hon. Member mean by percentage?

Mr. Fraser: I do not think that I have got it wrong. I think that Hansard will show that I did not get it wrong. Both the White Paper and the Report of the investigating Committee proposed that, in place of the addition of 25per cent. to the standard rateable value in England and Wales to get the average in Scotland, there should be substituted a notional figure to absorb the total of the eleven-eightieths—the Goschen formula, or the extra money. I say that we have had no documents giving us the notional figure. What is the new percentage? The Secretary of State has not told us this afternoon.
Early in his speech the Secretary of State called attention to Clause 4 (2) and Clause 4 (4). These are just beyond understanding and I was not surprised, though I was a little disappointed, that the right hon. Gentleman did not seek to give us some explanation of them in his speech. The White Paper gives the impression that all the gains to local authorities are the direct consequence of the adoption of the Goschen formula.
I believe that I am not wrong in saying that the speech of the Secretary of State further buttressed that impression, but surely some of the increases or some of the rate reliefs flow from the adjustments proposed under Clause 10. It is the discontinuation of the capitation grants and the employment of the new formula as a balancing factor for educational grants and for the disbursement of moneys in lieu of rates on certain nationalised properties. Some of the rate reliefs flow from those adjustments.
Those that do flow from those adjustments, of course, do not come out of the £2 million at all. That ought to be clearly understood, because some authorities in Scotland, and many Members of Parliament, have assumed that if any authority is to receive relief under this Bill that authority will be receiving some part of the £2 million. But if I have read the Bill aright, that is not necessarily so. Some of them would have received the rate relief from adjustments provided in Clauses 10 and 11 even if there had not been an additional penny of Exchequer grants.
The Secretary of State has told us, and we have read it in the Report, that many small authorities who would suffer in consequence of discontinuation of capitation grants and the adoption of the new formula in Clause 10 have to be protected as the first charge on new money. I believe that to be wrong. It is the one departure from the investigating Committee's Report. The Secretary of State says that only £200,000 is involved. He may be right, because he has the facts and figures at his disposal. I have checked over the White Paper and have calculated that some 90 local authorities would be protected against an increase in rates by assistance out of the new money. Indeed, the protecting of the local authorities is, by the final words of Clause 4 of the Bill, the first charge on the new money.
That seems to me to be quite wrong. There is no principle in the decision at all, and it is a great pity that the Secretary of State has made the provision. If he wishes to protect these authorities who would suffer the increase in rates under the changes proposed in Clauses 10 and 11, it seems to me that the right thing for him to do is to find money from other sources rather than take it from the local


authorities who stand to benefit from Exchequer equalisation grants. That is a matter which we shall no doubt examine further in Committee, and a matter upon which my hon. Friend the Member for Glasgow, Central (Mr. Mclnnes) will have something more to say.

Commander Galbraith: So that I may understand the hon. Gentleman, it is his suggestion that "some other source" might be an additional sum from the Treasury?

Mr. Fraser: Yes, that is what I had in mind. I think that it would be far better. If the Secretary of State wishes to protect these people from loss, I do not think that in equity he should take the money from the people who are entitled, by reference to their rateable value, to enjoy Exchequerequalisation grants. I said in the Scottish Committee in July that, in my view, rateable value was not the best yardstick to measure need. I said at the time that I was not sure that I was speaking for all my hon. and right hon. Friends, but I think that now I am speaking for them. I should like to repeat what I then said. We accept the responsibility for introducing it in the 1948 Bill and it has served many authorities in Scotland well. The Investigating Committee said that they could see no good reason for departing from using this yardstick, but I feel confirmed in my belief that that yardstick is faulty.
I get confirmation even in the Bill, where the Secretary of State proposes to adopt a notional rateable value for local authority houses as determined by him, instead of the actual rateable value, as a measure of rateable value and thereby as a measure of need in the area of any local authority. I merely say, in passing, that I welcome this step towards my point of view. I believe that we all welcome the proposal to apportion a calculated share of equalisation grants to small burghs and district councils. We must all regret, however, that at the present time we can have only temporary arrangements to help local authorities in their financial difficulties.
We must allow the Bill a Second Reading without challenge in the Lobby. I cannot, however, make any such promise about the Committee stage. There are details which will have to be closely examined, and many explanations

will be sought. It is impossible, however, so to amend the Bill as to provide a long-term solution of the problem of the relationship between the Exchequer and local government in connection with the provision of moneys for local services. Many problems will remain, none more obvious than that which arises from the continuation of derating as introduced in 1929.
A promise was made in the White Paper of 1928 that the loss of income from derating would be balanced by compensating Exchequer grants. We must try to fulfil the promise which was made then. Many changes have occurred since then, but local authorities are still aggrieved that they are not being given compensation from Exchequer funds for loss of income from derating. We must either repeal the 1929 provisions or find additional money from the central Government to assist local authorities in carrying through their work.
I need comment no further upon the Bill at the moment. We shall give it a Second Reading today, but we shall examine it very closely on the Committee stage.

4.21 p.m.

Mr. Walter Elliot: The one thing with which we shall all be agreed is that this is an exceedingly complicated Measure. Reference has been made to Clause 4 (1), which reads:
The adjusted rateable value of a county, of the landward area of a county or of a burgh for any year, for the purposes of this Act, is the amount which would be the rateable value of that county, area or burgh for that year if in the valuation roll in force therefor on the first day of that year every local authority house were entered at a rateable value of such amount as the Secretary of State may determine to be the average rateable value for the year preceding that year of all local authority houses in Scotland.
This is optimistically referred to in the margin as:
Meaning of 'adjusted rateable value' and 'standard rateable value'.
In those circumstances, it is natural that many references will have to be made to the gospel according to St. Andrew. But we must try to apply our minds to the meaning of what is being done here in general.
The first thing for the House to grasp is that a grossly bad and foolish Act was


placed upon the Statute Book in 1948, and this is a belated attempt to remedy some of the growing evils and scandals which arose under it. Nobody can deny that. This difficulty is not confined to Scotland. The incapacity and incompetence of those bringing forward that Measure was so great that they placed upon the Statute Book a law which is breaking down as badly in England as in Scotland, except that as the whole country of England has its good areas as well as its bad areas, the sharp differentiation which we can see becoming evident at the Border has not yet penetrated into actual legislation in England.

Mr. A. Woodburn: I suppose the right hon. Member for Kelvingrove (Mr. Elliot) is still suffering a little from the smarting he had when the previous Measure was going through the House and he could not get his own way. He has made some very extravagant statements about the Measure not working, but has he read the Report on the operation of Exchequer equalisation grants in Scotland, and does he refute what it says about the benefits? Is he prepared to go to the Highlands of Scotland and say that the Measure has not benefited them?

Mr. Elliot: I shall make my speech in my own way, and I shall deal with all those points. According to the statements in the White Paper, but for this Bill the provisions of the previous Measure would have overtaxed all local authorities this year to the extent of over £2 million sterling. There is also back money for five years, under which Scotland has been smarting—to use the right hon. Gentleman's own expression.

Mr. Fraser: Two million pounds each year?

Mr. Elliot: The evil has been growing. The hon. Gentleman must not attempt to put words into my mouth. I say that the lag began five years ago and it has now reached the point where Scotland, but for the legislation of this Government, would suffer a loss of £2 million sterling this year.
The right hon. Member for East Stirlingshire (Mr. Woodburn) asked if I would go to the Highlands of Scotland and speak about the evils of the previous Measure. I certainly would go there, and

I should speak about some of the examples mentioned in the White Paper. Under the provisions of the right hon. Gentleman's Act, Caithness, by the figures given in the White Paper, would be overtaxed to an extent of 3s. in the £. They will now be relieved from that. It is the agreed statement of all the local authorities in Scotland that they are being overtaxed, and these figures can be quoted for many of the Highland areas. The right hon. Gentleman the Member for East Stirlingshire cannot escape from the fact that this Bill is being brought in to remedy a scandalous bad piece of legislation placed upon the Statute Book by his Government.

Mr. Woodburn: The right hon. Gentleman is building his case on the fact that he objected to the 25 per cent. When the previous Measure was going through the House, it was explained that the 25 per cent. was an inheritance from Tory Governments of previous times, which had accepted that as the standard relationship between Scotland and England. There was no evidence at the time to show that it was wrong, so it was left, and a promise was given that when revaluation took place in England, and the matter was investigated, this question would be reviewed. Until that information was available, we were compelled to accept what had been laid down in previous Tory Acts of Parliament.

Mr. Elliot: I admire the way in which the right hon. Gentleman leads with his chin on every possible occasion. If he had read the debates in the Scottish Grand Committee, he would have seen a statement by his hon. Friend the Member for Hamilton (Mr. T. Fraser) on 7th July, 1953, to this effect:
I do not think that 25 per cent. was far out "—[Official Report, Scottish Grand Committee, 7th July, 1953; c. 148.]
He was not basing his argument upon the opinions of past Tory Governments, but upon the evidence available to him at that time, and that was in 1953.

Commander Galbraith: Is it not a fact that the right hon. Gentleman who was then Secretary of State for Scotland actually said that we should accept the 25 per cent.
…as being reasonably accurate and fair to Scotland."—[OFFICIAL REPORT, Scottish Grand Committee, 10th December, 1947; c. 2230.]

Mr. Speaker: This debate is becoming a little irregular. Hon. Members should be allowed to make their speeches with as little intervention as possible. That is the old custom and the best one. I am far from forbidding an occasional interjection, but this debate is really becoming a conversation.

Mr. Elliot: I am always most willing to give way—all the more so as we are discussing two of the subjects which are dearest and nearest to the hearts of Scotsmen, namely, local government and money. It is almost impossible for us to contain ourselves when these subjects are being considered. If I do not give way subsequently, I hope that hon. Members will not attribute it to any discourtesy on my part; it will be merely my humble desire to fulfil your Ruling, Mr. Speaker, as far as possible.
Nobody can deny that under the previous Measure the disproportion of taxation in Scotland was growing to a point where repealing legislation had become necessary. That is what this Bill states in the opening paragraphs of the Explanatory Memorandum; it says:
Clause 1 provides for the discontinuance of the Exchequer Grants payable under the 1948 Act and for the payment instead,…
of certain other sums. Our difficulty is that we are now trying to deal with a piece of bad legislation by an amending Measure, and that leads to a great deal of complication and difficulty.
I say that this complicated Bill arises out of a bad piece of legislation, that this bad piece of legislation has overtaxed Scotland to a considerable degree, that all credit is due to the Secretary of State for Scotland who has succeeded in arresting that. But he has not succeeded in getting the back money. This heavy burden, unjustly extracted from Scotland, still remains on our shoulders. All we can hope is that in future some of these gross mistakes will be set right by the Bill at present before the House.
My right hon. Friend said, rightly, that the local authorities have on the whole agreed. But I think he said himself that the counties of cities are by no means happy about the position as it stands at present under this Bill. After all, the counties of cities do include a very considerable proportion of the population of Scotland. It is true that they are

to a certain slight extent relieved by this Measure, but I still think that, in view of the burdens which the counties of cities carry, a further share of these moneys might reasonably have been given to them.
I think that we under-estimate the extent to which burdens from the rest of Scotland pour into the great cities. Take one single example. In Glasgow we have built, as hon. Members know, something of the order of 30,000 houses. When we started that building we had a waiting list of 70,000. Now we have a waiting list of 120,000 or thereabouts. We have added two people to the waiting list for every single person we have taken off by building a new house. [Interruption.] I have not before me the whole of the gospel according to St. Andrew.

Mr. John Wheatley: We are talking about building.

Mr. Elliot: The difficulty of the great cities is that in some ways they underwrite the whole economy of Scotland. People pour into the great cities from many areas, sometimes looking for employment, sometimes they are older people coming to the end of their days. It is not quite true to say that we can judge the burden on the great cities solely by the accepted standards of the whole country. I think that a certain amount of consideration should be given, and can be given readily, to what I call the residual problems which press more heavily on the cities than they do on the rest of the country.
I do not wish to stress that. I did say, when this sum was first announced in the Scottish Grand Committee, that I thought it was a pity that it should be too quickly allotted according to existing formulae, and that some might well be allocated, in respect of the more clamant problems of housing, which includes overcrowding. This in Glasgow is of an altogether different order to that in some of the country areas which may do well—I do not complain of it—from the proposals in this Bill.
The very complicated details of the Bill will, I think, require to be elucidated further in Committee. I do not think that we shall get very much closer to them on Second Reading, which is, after all, the time at which no one can consider the great problems and the general principles.
I say that the whole difficulty arises from the optimistic belief, apparently of Government Departments as a whole and certainly of the Minister of the day in 1948 that a revaluation in England of every house from end to end of that country would be speedily carried out and would be smoothly translated into legislative and financial provisions. It was not the sort of expectation that anyone with practical experience could really justify. Now in page 3 of the Committee's interim Report it says:
Pending revaluation in England and Wales, however, the Committee do not consider it possible to arrive at a precise arithmetical measure of the difference in the levels of the rateable value of the two countries"—
the inference being that revaluation in England and Wales will soon be carried out and that then it will be possible to arrive at a precise arithmetical measure of the difference in the levels of the rateable value in the two countries.
It will be years and years before that is carried out, and further years before it is translated into actual financial provisions. I do not understand the optimism with which this problem has been approached either in the back-rooms of the Departments or by the Government which introduced the Act of 1948.

Mr. T. Fraser: And by the present Government.

Mr. Elliot: The present Government have brought in an admittedly interim Bill. The French have a proverb, "Riendure comme le provisoire," and lest my French accent is not very good I would say, translating, there is nothing that lasts like the provisional. One of the dangers that I see in this Bill is that it is still rather closely connected with revaluation in England, and I fear that. I think that, if it is to be closely connected, there should be a time-limit in this Bill of, say, a five-year period. I am certain that by the end of that time-limit we should still find we were a long way off having a complete new Act, a complete revaluation, translated into the sections of a statute, of the properties in England from the Border to Land's End.

Mr. Fraser: Has not the Minister of Housing and Local Government said that this revaluation would be completed by 1956? That seems to me to be three years hence.

Mr. Elliot: I am talking not only of the revaluation. I am talking of translating that revaluation into the Clauses of a Bill and into financial provisions. Once the revaluation has been done, it will still be necessary to translate that, and I should not be at all surprised if even the Minister of Housing and Local Government, great though his knowledge is, were a little over-optimistic on this point. I still say that the difficulty of hanging our Scottish Measure on English valuation is the difficulty of carrying through the English valuation which will recur and come back again to succeeding Ministers and even to succeeding Governments, and we must face that.
The question whether the rateable value is the proper yardstick was raised by the hon. Member for Hamilton. It may not be, but it is at any rate in Scotland, a straightforward figure which can be understood. I personally prefer a much greater use of the formula containing such factors as the number of young children, the mileage of roads and so on. I think that in many ways brought components into the argument that were much more useful and in some ways much more definitely ascertainable than this rather fluid figure of rateable value. The City Assessor in Glasgow has just revalued all the departmental stores; a very great alteration has taken place there. The number of young children under five is on the contrary a fairly well-known figure and a fairly constant figure, and similarly the number of miles of major or even minor roads is also a figure which can be easily measured, and about which there is no dispute. I am not at all sure that the departure from the old 1929 formula was in itself an advantage.
In present conditions local government everywhere is suffering the most fearful strain and is being very badly distorted. It will probably be necessary to carry through further valuations and, maybe, further reforms in local government, but we cannot believe that while year by year the whole of the rate figures are constantly subject to these earthquake changes. I throw out for the consideration of the House the suggestion that for five years we should pay the present rate levels in Scotland, meanwhile discussing the wider questions of local government which will have to be tackled and solved if local government is to continue to


exist. I do no more than throw out the suggestion. The Second Reading is an occasion when questions going outside the narrow ambit of the Bill may be considered.
This is a temporary Measure, and it is inevitably complex. It will undoubted here and there be unsatisfactory, and in certain quarters it will lead to a sense of injustice being felt, such as is felt today in the counties of cities. I am sure that we must give the Bill a Second reading, and we must compliment the Secretary of State upon the success of his action in remedying the mistakes and omissions of his predecessor. But we cannot be at all satisfied with the position as it stands. Nor can we be satisfied with the position as it will be when the Sorn Committee reports. The Sorn Committee's Report will not be Ten Commandments coming down from Sinai and receiving the universal acceptance of all who see them. We have had such reports before and we have not always greeted them with the universal acceptance necessary to get Measures through a difficult and stubborn House of Commons and, in spite of what the best we say about it, a very argumentative Scottish Grand Committee.
We need to be thinking now of the steps which we shall take when the Sorn Committee's Report is received. We must consider our steps against the background that at present local government is suffering very heavily indeed. Local government in both Scotland and England is undergoing strains which it was never built to carry. Unless we can do something to remedy this, the whole great structure of local government, of which we are proud in both Scotland and England, will be damaged, maybe irreparably. It may well be turned into an annex of the central Government or a mere set of rubber stamps getting money and Measures from the State, putting the two together in an office and passing the result out to the rest of the world as local government, when it is nothing of the sort.
This is by no means an unimportant Measure. I hope that it will lead to our considering very thoroughly the wider problems involved, of which the Bill and the 1948 Act are mere symptoms. The deep-seated malaise of local government, if not still undiagnosed, is still un-

remedied. It will remain unremedied even after the Bill reaches the Statute Book, which I hope it will do very shortly.

4.44 p.m.

Mr. James Carmichael: I am rather diffident about participating in the debate. The first three speakers have all had close association with St. Andrew's House. Two of them were former tenants of it, and the Secretary of State still occupies it; and each of them said that this was a very complicated Measure. Thus, the diffidence of a back-bencher can be appreciated.
I do not propose to argue about the 1948 Act. The fact that we shall agree to the Second Reading of this Bill indicates that certain shortcomings have been found in the 1948 Act. We all appreciate that local government in Scotland is in a very difficult financial situation. In the Scottish Grand Committee, during the summer, I said that I regarded local government as one of the most powerful influences in democracy.
In connection with the Bill we have to bear in mind that the amount of money to be granted will not give substantial gains as the Secretary of State suggested. There are about 87 authorities in Scotland who will not get a penny in the way of grant. I exclude Glasgow from my calculations, for Glasgow will get a rebate of about 2d. However, if we examine the Bill we discover that Glasgow does not get it from the £2 million; Glasgow gets it because Clauses 10 and 12 alter the 1948 Act.
There is something seriously wrong about this. How can there be a substantial gain to Scotland when 87 authorities will get nothing? That fact is admitted in the Bill. It is a very unsatisfactory Bill if it needs a provision like Clause 6, which clearly indicates that, in the event of any local authority having a loss, arrangements will be made from the Exchequer to cover the loss. This is evidence that the people who framed the Bill saw its shortcomings.
We regard the Bill as an interim Measure. It is interim because we are awaiting the Sorn Committee report and also the revaluation in England. If the Sorn Committee is to do its work properly and we are always to be tied


to England, it indicates that the Committee will remain in session until England has been revalued. The stress in the White Paper is on revaluation in England, and perhaps the Joint Undersecretary of State, who has some association with accountancy and is better able than I am to handle figures, will tell us whether he expects the Sorn Committee to remain in session until it has examined the revaluation in England.
I should like to have seen it suggested in the Bill that we should not work on the formula of eleven-eightieths, which is based on the English practice. We all recognise that it is not a good yardstick. The point was made in a general way by the right hon. Member for Kelvin-grove (Mr. Elliot) when he suggested the basis might be population. I feel we might have regard to the population of the cities and the counties. We might also have considered the problem of derating which is a very important point. It might have been possible to evolve a formula operating on the basis of both population and derating.
In that sense, the highly populated boroughs, which are undergoing a tremendous strain at the moment, might have some easement. We can understand that the people running local government in the City of Glasgow are somewhat disturbed when they find that the City of Birmingham gets £1 million out of equalisation grant and the City of Glasgow gets nothing.
As a matter of fact, according to the figures for the last financial year, Wales got almost double what Scotland got. I am not arguing that we should readjust our finances so as to take something off the City of Birmingham. Neither am I suggesting that Wales is getting too much. My own view is that the financial commitments of the Government through the Exchequer grants with the rapid development of local government are not big enough to meet the responsibilities of local government.
I want to make this particular point. Is it not possible for local government grants in Scotland to be allocated purely on a national basis and to be the responsibility of the people of Scotland? I do not know why we should always be brought in behind the formula adopted in the English Measures. I think that it

is possible, recognising the responsibility of local government in Scotland, to devise ways and means of giving Exchequer grants without taking into account any other part of the country.

Commander Galbraith: Surely the hon. Gentleman will agree that the formula is contained in a Scottish Bill. The financial formula is devised by the Scottish Ministries and put in a Scottish Bill.

Mr. Carmichael: Yes, but the point which has already been made this afternoon is that it is based on English calculation and, in my view, there is no reason why we should not examine the structure of local government in Scotland and its financial responsibilities exclusive of any other part of the country. I say the same about England and about Wales. It should be possible for any Government to measure the responsibilities of authority in Scotland, England and Wales separately and to make their financial allocations according to their needs. We do this in other directions.
We are the heaviest hit area in respect of unemployment of any part of Britain. Even in the hour of prosperity, the West of Scotland always has the difficult problem of unemployment, which exceeds that in any other part of the country. Similarly, with the housing problem. Our housing problem, particularly in the West of Scotland, will be a serious burden on local authorities for many years. That should be taken into account quite separately from measuring up to the standards in England.
There is one further observation which I should like to make and I hope that someone associated with the recommendations of the Sorn Committee will take note of it. Whatever policy is finally evolved and whatever the method of measuring Exchequer grants to local authorities I hope that it will be done in such a form that it will be possible for people to understand it. I think it is shocking that we have men in public life today adopting a Bill—even the Minister himself—who, if they were thoroughly cross-examined on it, would have the greatest difficulty in explaining the Clauses detail by detail.
There is something wrong with the way of government if people cannot understand a Bill. The Secretary of State for


Scotland is a most tolerant, kindly man, who never "loses his wool," but if he had not taken great care in the preparation of his speech and if he had lost a sheet of foolscap when going to the Dispatch Box, I think he would have been in a serious mess this afternoon. Yes, there is something seriously wrong in the State of Denmark or in the state of St. Andrew's House.
I plead that when we are bringing forward Measures associated with local government, and particularly with rating, they should be so framed that even Members of Parliament who claim to be some authority on the ways of Government, can understand them. If we cannot do that we can readily understand the inability of people to harness themselves actively and objectively to the machinery of democratic government. In my view, one of the reasons why there has been a very serious decline in interest in local government work is because of the complicated Measures brought forward from time to time.
I back this Bill, but with a whole lot of reservations. If this is the Bill which is to supersede the 1948 Act, I am not very enamoured of the proposition after the boosting which it got from the right hon. Member for Kelvingrove.

4.57 p.m.

Sir William Darling: I find myself in very full sympathy with the hon. Member for Bridge-ton (Mr. Carmichael) in what he has said. This is a very complicated Measure. Local government in relation to Parliament always has been complicated, and I think it is fair to say that the 1947 Act, for which the hon. Member for Bridgeton had at least some responsibility as an ardent supporter of it, was also a piece of complicated legislation. I remember the debate in the Scottish Grand Committee on that Bill, and I remember the part which hon. Gentlemen took in it. The hon. Gentleman's hon. Friends, if not he himself, commended it. I did not. I said at that time that the Bill was impossible and likely to lead to disaster when it came to be applied.
My experience of this affair was that we were led by the number of observations made by the then Secretary of State for Scotland. For example, when speaking about the 25 per cent., he

said then that 25 per cent. was reasonably accurate and fair to Scotland. He said that on 10th December, 1947, and in case he felt that I had not been fully convinced, he went on to say that the Committee should accept the decision of the Government. The former Secretary of State also said that the acceptance of the England and Wales standard plus 25 per cent. was best for Scotland.
The hon. Member for Bridgeton did support him, but the hon. Member for Ayrshire, Central (Mr. Manuel), always a powerful ally in any hard fought field, came forward and told the Secretary of State at that time that he was quite satisfied that the grant proposed by the Secretary of State was reasonable. Here we are this afternoon with a Tory Government seeking to amend a Measure which, from the very outset, was condemned by many local authorities in Scotland and certainly by many Tories.

Mr. A. C. Manuel: The quotation which the hon. Gentleman gave as emanating from me arises, I take it, from the 1948 Act. The Central Ayrshire constituency was not created then, and I certainly was not here.

Sir W. Darling: I think it was the Member for South Ayrshire (Mr. Emrys Hughes). If the hon. Member for Central Ayrshire thought that I was addressing myself to him he must have felt carried away with ecstasy. I had no such intention. I was indicating that the then Secretary of State for Scotland, the right hon. Gentleman the Member for East Stirlingshire (Mr. Woodburn) had the support of his hon. Friend the Member for South Ayrshire.
When we hear the hon. Member for Bridgeton and his hon. Friend the Member for Hamilton (Mr. T. Fraser) decrying this Bill—and no doubt it has its intricacies and anomalies—I have little sympathy with them, because they are the guilty men. They are the men who imposed this piece of legislation upon our unhappy country. They need not pretend it was wanted, because local authorities at that time, again referring to the 25 per cent. grant, said that this equalisation was open to criticism; and even allowing for a considerable margin of error, which certainly is not all on one side, the 25 per cent. addition was quite inadequate, even in 1946.
The hon. Gentleman and his hon. Friends forgot the warning they had received, and not from ignorant Tories who knew nothing about local government in the sense that Glasgow knows about it. They had no time to listen. They were carried away by this kind of free for all which gave nothing to Glasgow, nothing to Edinburgh, nothing to Aberdeen and nothing to Dundee; which created the preposterous anomaly referred to by the hon. Member for Bridgeton, in that a place like Birmingham, with a similar population to Glasgow and with an abounding and expanding prosperity, was getting thousands of pounds while Glasgow was getting nothing.
That was the Act which right hon. and hon. Gentlemen opposite fastened upon the Scottish public, and it has been left for my right hon. Friend—I admit it is a difficult and disagreeable job—to come forward with what is admittedly a complicated remedying Measure to put right the foolishness, the anomalies and the absurdities of the Act which right hon. and hon. Gentlemen opposite forced upon us.

Mr. T. Fraser: I wonder whether the hon. Member can explain how, in this Bill, the Government can put right the anomalies to which he has just called attention. He will be aware that Birmingham will continue to get nearly £1½ million by the Exchequer equalisation grant, and that Glasgow will continue to get absolutely nothing.

Sir W. Darling: I am aware of that. This Bill is only a remedying Bill to deal with some of the anomalies. The hon. Gentleman will hear from Edinburgh and Glasgow a justification of what I am pointing out, that the Act emanating from his brain and from the brains of his right hon. and hon. Friends is, as the hon. Member for Bridgeton pointed out. riddled with anomalies and absurdities; and that, so far as Scotland is concerned has been the insecure foundation on which we have to build in trying to remedy some of the anomalies.
We are trying to get over the fundamental difficulties imposed upon us in Scotland by the right hon. Gentleman and his Friends. I find myself very much in agreement with what the hon. Member

for Bridgeton has said. He said that we began this experiment, this investigation, which led to the 1947 Act on the basis of what was the English system. Looking at the English system we found the Minister of Health engaged in a valuation which, he said, could be carried out in 18 months. The advisers of the then Secretary of State for Scotland said, "Scotland has come behind England very often. This is not a bad thing to do. We in the Socialist Party do not believe in Home Rule for Scotland very much, and if the English Minister of Health says it can be done in 18 months we will have an interim Measure to carry on."
That is what I and the hon. Member for Bridgeton object to equally, the acceptance of the promise, or hope, or suggestion, or anticipation, of the English Minister of Health, that he would have a basic valuation for us in about 18 months' time. They accepted that advice in good faith and, as an interim Measure for Scotland, they produced an Act which is full of anomalies.
The English Minister of Health let us down. It reminds me of the second phase of the March retreat in 1918. I was standing on a ridge outside Albert with the 9th Scottish division and I was talking to a medical officer. On the right was an English division, I think it was the 21st. The line was going back. The whole British Army was in full, but fighting retreat.
I said to my friend, this medical officer in the Scottish division, "What do you think is happening on the right?" He said, "Look at it. I fear our English allies have let us down again." In this instance the then Secretary of State for Scotland, backed by the hon. Member for Bridgeton and others, found that his faith in the ability of the English Minister of Health to arrange a valuation in about 18 months was not justified—our English allies had let us down again.
We had hoped that we had got from them a formula on which we could base an improvement. It did not happen. For five long years we have stumbled along and now there comes along a proposal that there may be this grant from central public funds. I agree that it is a very complicated Measure, but it follows a very bad Act, which, I repeat, was objected to at the time and which has many anomalies apart from those mentioned. It


made too much of the needs criterion which I do not think so important. As my right hon. Friend said, it did not take into account a certain number of difficulties from which large communities suffer.
It must be said that after all this was not a politician's plan. Politicians have their limitations and stupidities. But this was a plan sold to us by the bureaucratic planners. Simple men like the hon. Member for Bridgeton and myself could never have thought of such a plan. Neither he nor I would dare to go to a municipal meeting and try to explain it, even if we were able to understand it.
Let us not be too unhappy about this Bill. It is one of those things which came from what the Secretary of State for Scotland referred to as the "temple of St. Andrews" or the "kirk of St. Andrews"—I am not sure which. It was a plan pushed on us by the Civil Service bureaucrats, and they have not done too well. They have had too many successes not to meet an occasional set-back and this plan was extremely badly done.
Whether we should indict the Minister of Health in England or the Department of Health in Scotland I do not know, but the whole House agrees that this matter should be remedied. But do not let us forget that the people who accepted the wrong advice, or the misleading advice, in the first instance were those hon. Gentlemen, now so smug and self-complacent, who are sitting on the benches opposite. If my right hon. Friend has made a mistake or a blunder by this Bill and if, when it becomes an Act, it is no more fortunate than the Act which preceded it, he may salve his conscience by asserting that it was not he who took the first step along that foolish road.
I would put forward my own history—not a very authentic one—of this long and difficult business. These Exchequer equalisation grants have been on the go since 1948, but I would point out that when they were first put into operation some right hon. and hon. Gentlemen opposite took the advice of the English Minister of Health. They took the hospitals from the local authorities. The Socialists believe in principle no matter how absurd and foolish the practice may be. They took from the local authorities

their hospitals and—what was not such a rich and a ripe plum—the Public Assistance administration.
But more than that, because from some authorities they took away their transport, their gas and their electricity, these were very valuable parts of local government administration. They enabled local authorities to reduce what I think are called general overheads, the administrative expenses of the local authority under five or six headings instead of one or two. So, when this particular Act was brought forward, it had first dismembered local authorities in a very serious direction. They were bleeding from almost every pore. There was immense dissatisfaction.
I know Glasgow Socialists who were shocked and horrified when they learned that the application of the theories which they had been preaching for 30 years really meant that the Glasgow hospitals, Glasgow trams, Glasgow gas and Glasgow electricity had to go from the control of the local authority. Many Glasgow Socialists never recovered from the blow. They still call themselves Socialists, but that is all that is left, for they are now only that in name.

Mr. McInnes: Is the hon. Member aware that on not one single occasion did Glasgow Socialists protest about the Public Assistance and health services being taken over from the local authority?

Sir W. Darling: That would surprise me, 'but I accept it that they were glad to get rid of the care of the poor of Glasgow. They did not protest, but they said, "The care of the poor of Glasgow is no longer ours. Let us give it to Mr. George Buchanan."

Mr. Carmichael: On a point of order. Surely the discussion of the Assistance Board is not relevant to this Bill. I know, Mr. Deputy-Speaker, that you have a discretion on the Second Reading in allowing a line of argument to be developed, but when hon. Members refer to Public Assistance in Glasgow as it was 10 years ago surely we are getting very far from the Bill.

Mr. Deputy-Speaker (Mr. Hopkin Morris): I understood that the hon. Member's argument was directed towards tracing the history of this matter.

Sir W. Darling: I am very glad, Mr. Deputy-Speaker, to have your support and also that of the hon. Member for Glasgow, Central (Mr. McInnes). He is a little nettled at the point which I have raised, which is a very relevant one.
In spite of the discomfort of the hon. Member for Bridgeton, I am willing to accept that Glasgow, which produced James Maxton and others whose names I cannot mention because they are hon. Members, never protested that the care of her poor, who are always with us, was taken away by the cold, clammy hand of the National Assistance Board. I am surprised, but I am willing to accept it and glad to have it on record.

Mr. Deputy-Speaker: The hon. Member is now straying a little wide.

Sir W. Darling: My general argument is made, and that is that in 1947, when the Act which is the forerunner of the Bill which we are discussing today, was applied by the then Socialist Government to local authorities, and which, as I suggest, dismembered them, it meant that they lost control of Public Assistance, of their civic transport, of their civic gas service, of their civic electricity service and of their municipal hospitals. And what I am arguing is that it was at that moment that a further brutal blow was delivered upon the City of Glasgow and certainly upon the City of Edinburgh.
I am referring to the Exchequer equalisation grants under which some bodies got more than they expected and some got less than they deserved. I happen to be the Member for Edinburgh, South and I want to refer to the particular position of the capital city. Although many of the local authorities got much that they did not expect under the 1947 Act, some got nothing. Edinburgh got nothing. In fact, it was worse than that, because Edinburgh lost £232,000 of its annual income, and is still losing a sum relatively in that neighbourhood.
I note that the hon. Member for Glasgow, Central has written down the figure probably to improve it by thinking of a number, doubling it and adding the first number of which he thought. But I will give him the details of the formula by which Edinburgh has been—and I do not think it is an exaggeration to say this—defrauded of £232,000 under the

previous Act and is continuing to be defrauded under this Bill.
The formula was calculated on the loss of the block grant, the loss of savings in the transferred services and the education grant. Edinburgh, Perth, Inverness, and the county for Peebles were, under the previous Act, literally minus authorities, but the pill was sweetened by a transitional grant which was to be £357,000. That formula was based on the £232,000 I have referred to, plus 4⅘ of the rate, which is to say, £125,000. This grant was for five years, it diminishes by one-fifth each year and it finishes this year.
Under the Act of 1947 and under this Bill when it becomes an Act, Edinburgh this year will be under the permanent loss of £232,000. It is a very important matter because this new Bill is going to lay a second foundation and leave the other as if it were unrecorded, forgotten history.

Mr. Mclnnes: How can the hon. Member expect us to accept those figures in any degree of confidence when he makes the reckless assertion that Edinburgh and Glasgow have lost their transport undertakings? The actual position is that Edinburgh and Glasgow still run their own transport.

Sir W. Darling: The hon. Member is at least six or seven sentences behind. I thought he would have taken me up on that point earlier. It is the case that the central administration of many of these municipal services—I did not specifically say which local authority—has been denuded, and the local authorities are now left with a loss of revenue when meeting their overhead, administrative costs. While the hon. Member makes the point about Glasgow which he is entitled to make, he will not, I am sure, refuse to accept my general argument that the City of Edinburgh on the basis of the 1947 Act has been permanently deprived of this sum of money. Nothing that was done in that Act and nothing in this Bill is calculated to put that right.
Under the new plan which is envisaged in the Bill £2 million is to be made available from the central Government. I do not like the phrase "central Government," and I should perhaps say that this sum of money is being made available from the taxpayer—he is the central government—to the ratepayer. It is


approximately eleven-eightieths of the aggregate grant of England and Wales, and I think this is admirable. The Secretary of State is entitled to praise for this achievement but it means very little in the City of Edinburgh. I will go further and say that, looking the gift horse in the mouth, if we are justifiably entitled to £2 million for this year, it is a shortfall of what we should have had last year.
I would suggest to the Secretary of State that while he has been bold and successful in securing this £2 million, he might enter a claim with some degree of justification for five years, because, during the time while the former English Minister of Health and his successor have been proving their incompetence to find in a reasonable time, a financial basis for valuation, which they have promised us. England has been dilly-dallying but we have been waiting. It is only in the fifth or sixth year that we get the £2 million.
I put it to my right hon. Friend that he should put forward a claim not for one year but for four or five years. Under those circumstances he would have a sum of money which he would be entitled to say was a fair allocation for Scotland in all the circumstances. I feel that while something must be said in praise of the Secretary of State for Scotland for procuring this £2 million, there is something else which should be added, and that is that the local authorities, which are outside the wide, general scope of these advantages, should be considered in some special fashion.
There is a great deal of natural sympathy for local authorities which have a small rating area where the penny in the pound return is negligible. I have more sympathy, however, for the four large capital cities, particularly Glasgow and Edinburgh, which have their own peculiar responsibilities. The old formula based upon unemployment, young children, mileage of roads, and so forth, should be modified because a new problem has emerged, that of the ageing population. An increasing feature of every local authority budget will be the provision of homes and hostels for old folk. This work has not been taken over by the National Health Service but left solely to the local authorities.
We all know that it is often to the large towns that folk tend to retire. The son

or daughter of the person who has worked his life out in one of the small burghs has probably gone to Glasgow or Edinburgh, Aberdeen or Dundee to secure work. When he retires, the father does not remain in Linlithgow or Cupar, as in my view he should, but goes to a big town and there makes a demand first on the housing reserves and secondly, possibly, on the provision of accommodation for old folk. I suggest that there is a case. If, as I hope, there is to be a fund of more than £2 million—a multiple of £2 million either by three, four or five—and if that fund comes into the hands of the Secretary of State, I hope that my right hon. Friend will consider the claims of the large authorities who have these special responsibilities.
If it happened that every local authority in England had something from an Exchequer grant except London, there would not be these empty benches this afternoon if that subject was being discussed. Yet that is what has happened in Scotland. The two great cities who carry the main burden of the production of wealth in the country are practically being left out of this arrangement. No special consideration is being given to them. They are supposed to be big enough to stand on their own. Yet, after all, they are capital cities.
The example of Birmingham has been given and London might well be instanced in comparison with the City of Edinburgh. When tragedy falls across our island the City of Edinburgh supports the Lord Mayor's Fund and readily gives what it can. When the great Festival of Britain was held in London the City of Edinburgh made a marked contribution. When, however, something reciprocal is required, this capital city is ignored altogether as if it were not. It has to arrange its own exhibitions, its own festivals, and if there are any grants to be given, they have to be given to other authorities.
It is a proper thing to try to raise those who have fallen and to assist those in difficulty, but it is an unwise policy which ignores the needs of the capital of a country. That capital is under great disadvantage in this Bill. It is not only under great disadvantage, but it is being ignored to an extent which is offensive to Scottish public opinion which I, as the hon. Member for Edinburgh, South, choose to voice this afternoon in this House.

5.23 p.m.

Mr. David J. Pryde: I regret that I cannot follow the hon. Gentleman the Member for Edinburgh, South (Sir W. Darling) in his attack on the English, much as I should like to do so. The hon. Gentleman has a very short memory because his goes back only to 1948 and does not, apparently, go so far back as that of his right hon. Friend the Member for Glasgow, Kelvingrove (Mr. Elliot), who told us that Scotland had been losing a great deal of money in recent years. I suggest that if Scotland has been losing money, she did not lose it through the effects of the 1948 Act but through that Section of Part II of the 1929 Local Government (Scotland) Act dealing with derating, which struck a mortal blow to local government in that country.
I am not blinded or hypnotised by the £2 million which Scotland is to get out of this Bill, because I am apprehensive of the Bill. It is ghostlike and weird in its construction. It reminds me of a thriller I read once called "The Ghost of Guy Thyrle," which was a forerunner of "The Invisible Man." The Secretary of State certainly has my sympathy. I listened carefully to his attempts to elucidate this Measure, and when the right hon. Gentleman told us that certain mining areas would benefit by it, the hon. Gentleman the Member for Edinburgh, South, told us that it was an amending Bill which would correct some of the doubts of the 1948 Act.
In my mind's eye I compared the effects of the two. I found that the 1948 Act steadied local government in Scotland and came to its rescue for the time being. At that time I pointed out, as I have consistently pointed out since 1945, that the entire structure and basis of Scottish rating must come under review. I doubt whether the present arrangements will bring any benefit because, as we have been told here today, we have had samples of that committee under that person before, and the local government bodies in Scotland did not benefit.
We have heard a great deal about north of the Caledonian Canal. I suggest that south of a line drawn from the Forth to the Clyde we find a state similar to that in the north, and I challenge the right hon. and gallant Gentleman who will wind up the debate for the Government

to tell me what benefit will accrue from this Bill to the small burghs in the south of Scotland, especially in Dumfriesshire, in Kirkcudbright and also in East Fife. Where is there a greater mining town than Dalkeith, lying in the centre of the Midlothian coalfield, with a record in housing and low rents second to none in Scotland?

Sir W. Darling: High rates.

Mr. Pryde: If the hon. Gentleman looks at the rates in Dalkeith he will find that they compare favourably with many of the burghs in Scotland.

Sir W. Darling: Not with Edinburgh.

Mr. Pryde: But Dalkeith gives greater service to its citizens than does Edinburgh.
The hon. Member for Edinburgh, South went to great lengths in trying to elaborate the case for the Bill, but he said something in agreement with his right hon. Friend the Member for Kelvingrove—he had his doubts about this Bill. My hon. Friend the Member for Hamilton (Mr. T. Fraser) propounded exactly what was wrong. What is wrong is simply that the local authorities in Scotland will never know exactly where they are because any grants that come to them from this House are based on an algebraic proposition: something has to be equal to something else and things that are equal to the same thing are equal to one another.
We must get down to basing Scottish taxation and rating on a more solid foundation. All the talk about waiting for the revaluation in England and Wales is so much moonshine, because there is a revaluation taking place in Scotland today. We are the only country in the world where property appreciates in value. In England the capitalist writes off something for depreciation each year, but in Scotland every year a house stands we add something to its value until it is falling down, and even then we want something for the site value.
I therefore suggest that the Government withdraw this Bill because it is a bad Bill. If my hon. Friends on this side of the House would take my advice, they would press for the withdrawal of the Bill because, otherwise, in years to come the people who come after us will blame us for coming here and passing a bad Bill.

5.30 p.m.

Mr. A. C. Manuel: We should first recognise that the Government are not claiming that this Bill is other than a sop to tide over what has become a particularly bad period in Scottish local authority finances. Therefore, this is entirely an interim Measure. Although we have heard today about the problems which the 1948 Act has brought in its train, we should recognise that that Act did a great deal of good. In many instances, it stopped the rot and enabled work to be done in various areas which otherwise would not have been done.
The 1948 Act tried to help the weaker and poorer areas which had been hard hit for a long time. When I hear hon. Members opposite criticise that Act, I like to remind them that there was a lengthy period after the passing of the Local Government (Scotland) Act, 1929, during which very little was done to help Scottish local authorities who were complaining bitterly from the commencement of that Act.
As a local government member for a lengthy period, I was certainly aware that local authority officials and members in Scotland felt that the 1929 Act had worked very badly from the point of view of future solvency in Scottish local authority circles. Under that Act, derating took large slices off the valuation in our industrial towns where industry was derated by as much as 75 per cent.; and in our rural areas there was an even larger commitment in respect of agricultural holdings.
The main provision on which the local authorities depended was that an Exchequer grant would be made to the local authorities to make up for that derating which took place under that Act. The complaint of the local authorities was that while this provision was maintained in the first year, it has steadily been whittled away, and that burden which was previously carried on a larger rate application field is now being carried on a narrower one, and this led to the necessity for the Labour Government to do something about it in 1948.
The adoption of the Goschen formula of eleven-eightieths in this Bill will certainly not solve the problem. We in local authority circles have never accepted that the Goschen formula was the best means of deciding what the Exchequer

grant should be. Although that formula has been adopted in this case. I think Clause 6 of this Bill shows that the formula has not succeeded in accomplishing what the Government required.
Clause 6 says:
Where the council of a county or the town council of a burgh are, under the provisions of this section, to be regarded as having incurred in consequence of the passing of this Act a loss in respect of the year 1953–54 or any subsequent year, there shall be paid to the council of the county or the town council of the burgh, out of the amount available by virtue of section one of this Act for the payment of Exchequer Grants in respect of the year in question, an Exchequer Grant (in this Act referred to as an "Exchequer Transitional Grant") in respect of the loss.
In other words, Clause 6 says that if we do not include that Clause, certain local authorities are going to lose under this formula. But surely the formula is not doing what it set out to do.

Commander Galbraith: Surely that has got nothing to do with the Goschen formula, which is giving us another £2 million to distribute.

Mr. Manuel: What I am saying is that the Goschen formula has not been accepted by Scottish local authorities as the best means of deciding what grant they should get from central funds. I was then passing from that and saying that the system which had been adopted under the disbursement formula has not accomplished what the Government wanted it to do, or they would not have needed to bring in Clause 6.
The Clause is merely a means of protection for the Government in order to avoid an outburst of feeling and indignation among a large number of Scottish local authorities who would have lost under this Bill but for the inclusion of the Clause. That in itself is a bad thing. Why are we having this situation in Scotland whereby, although we are getting an extra £2 million and although we have had a fairly large amount of money under the 1948 Act and the Goschen formula. Scotland as such is not receiving the financial benefit that it should have?

Commander Galbraith: The answer must be well known. It is because we are following the principles of the equalisation grant.

Mr. Manuel: If the right hon. and gallant Gentleman will allow me to


develop my point, I think my case will reveal itself.
The benefit under the 1948 Act would be much more apparent to Scottish local authorities if we had not in Scotland problems which are peculiar to Scotland and in particular to the Highlands. The Highlands, because of their low rate able value and their peculiar domestic problems, are receiving so much help from the Exchequer equalisation grant that they are taking too large a proportion. There ought to be a greater share of the grant going to the other local authorities in the industrial and more populous areas in Scotland.
I am sorry that the hon. Member for Orkney and Shetland (Mr. Grimond) is not here. When we consider that out of the total rate levied in Orkney for local authority work 70 per cent. of the outlay is met by the Exchequer Equalisation grant, hon. Members will appreciate the problem I am trying to pose. If we took the same percentage for Glasgow it would be nil, and in Ayrshire and most of the local authority areas in the industrial part of Scotland we would get the same result.
If there is to be a real chance of success, the Government ought to devise help for the crofter counties in the Highlands generally in the ratio of the needs of those counties. But that ought not to be made from the same central fund as that upon which other local authorities in Scotland depend. If the grant was not drawn upon to the extent that it is now drawn upon for the peculiar domestic problems of the Highlands, there would be more for disbursement in the Southern counties.
There ought to be a different way of meeting these peculiar problems of the Highlands than the way in which they are presently being met. When we are trying to get a cure we ought to be considering just what are the problems which local authorities face in Scotland. While we see that Highland local authorities have domestic problems we have also to recognise that authorities in more populous areas have also pressing problems because they are industrial and a greater proportion of the population live in their areas.
Attention should be paid to the amount of housing which a local authority must provide in the future when we are deciding the ratio of help they should get from the central source. Possibly the incidence of tuberculosis ought to be considered, the number of old people, the number of homes that will need to be built and things of that character in which the work of local authorities is restricted because they are not given enough help from central sources.
The matter we are talking about today is a serious one and of great consequence to Scotland. Those of us who are concerned about it and have some knowledge of local authority problems and the headaches which members of local authorities have in meeting the commitments which ratepayers ask of them must recognise that local authorities have more to do than ever. From 1929 there has been a curbing of local authorities influence and a greater dependence on the centre by reason of rateable value being filched from them. They are not getting what they should get in rates. Local authorities feel that they can only accomplish their job in their own areas if attention is paid by the Government of the day to the nature of their problems and if there is an adequate disbursement of the equalisation grant or whatever the central grant may be in relation to the problems of the respective authoritiesin Scotland.

5.44 p.m.

Commander C. E. M. Donaldson: We have had a short debate which has been peculiarly characterised by the fact that acceptance of the Bill and the financial benefit which will accrue to Scotland under the Bill seems to be so grudgingly given. I wish to illustrate my point by the fact that many hon. Members have criticised the Bill and the benefits to be received under it. I am not here to argue the merits of Glasgow and Edinburgh, and places referred to by the hon. Member for Central Ayrshire (Mr. Manuel).
It will be recalled by hon. Members that my constituency in the south-east of Scotland was used for illustration in the White Paper. I can say with truth that in Roxburgh and Selkirk there will be pleasurable acceptance of this Bill and the financial benefits which will acrue from it. Perhaps it does not give everything hoped for, but in large measure


there will be appreciation of the Bill and the fact that it is a step in the right direction, which Scottish Members on both sides of the House will admit.
The future will depend to some extent on the application of this Measure and of the Reports in relation to other subjects. The hon. Member for Midlothian and Peebles (Mr. Pryde) referred to the subject of rating values and derating. We all know that that is a very intricate problem, but we are not so concerned with the intricacies of the problem as with acceptance or refusal of this Bill. I am certain that Scottish Members will be indeed ungrateful and unappreciative of a vast step forward for Scotland if we cavil too much at the terms of the Bill. I think we should accept it—certainly with justifiable reservations in some cases—as something which, in broad terms, is good for Scotland. Therefore, I commend and support the Bill.

5.46 p.m.

Mr. James McInnes: We can all agree that this short debate has revealed that whilst we welcome and gladly accept the additional £2 million provided for in the Bill, nevertheless dissatisfaction has been expressed with the method of allocation. That has been expressed from both sides of the House and I think I should be justified in saying that that expression is the echo of dissatisfaction among local authorities now that they realise and appreciate all the implications of the Bill.
I know that it could be argued that it is only natural that those who get nothing, or those who get very little, under these proposals should be dissatisfied, but it would be correct to say that it was the dissatisfaction among local authorities which culminated in the present review. Indeed, the Secretary of State said so this afternoon. I must confess that the fact that we are getting an additional £2 million for Scotland does not prevent me from harbouring a feeling that it will take far more than £2 million to avoid the almost inevitable breakdown of the financial structure of Scottish local government.
I know that there were weaknesses add defects in the 1948 Act, but I rather thought the right hon. Member for Kelvingrove (Mr. Elliot) gave a bad example when he referred to the position in the Highlands and quoted the County

of Caithness. In fact, in 1952–53 Caithness received 56 per cent. of its net expenditure through equalisation grants, and I could quote another seven or eight Scottish counties which received over 50 per cent. of their net expenditure through these grants.
I well understand why the right hon. Gentleman advances alternative proposals, but he suggested that it might be worthwhile to consider going no further and that local authorities' rates should be pegged for five years. Does he mean that the rates should be pegged at their present level for five years and that any amount in excess of the present-day figure would be payable by the Government? What has the right hon. Gentleman in mind?

Mr. Elliot: It is rash for the hon. Member—my hon. Friend, if I may call him so—to ask me to start another speech, after I have just finished one. Naturally I should have tobe guided by the Sorn Report. The problems in that Report will be very great indeed, and I should need to take my proposals in connection with that Report.

Mr. McInnes: Ithought that the right hon. Gentleman would put forward a progressive proposal, but I visualise now what he has in mind. He anticipates that there will be a complete re-orientation of Scottish rating following the Sorn Report: that owners' rates will almost certainly be pegged or stabilised, and that the rating revenue of local authorities, from that source will, as a result, be infinitely less. The burden will have to fall on the owner-occupiers of other property. As a result, the figure of rating will be at a comparatively high level, and the proposal is that when it is pegged at that figure the national Exchequer shall not be asked to make any great or valuable contribution.

Mr. Elliot: The hon. Member is going too far if he tries to read all that into my remarks.

Mr. Mclnnes: It is intelligent anticipation nevertheless.

Mr. Manuel: We will see how the right hon. Gentleman goes when we come to the Bill on housing.

Mr. Mclnnes: In certain respects the right hon. Gentleman justifiably attacked


the 1948 Act. I confess that it contains many weaknesses and defects, but if the right hon. Gentleman was dealing in a broad way with the serious financial position of Scottish local government he should have recalled the Act which was passed by his own party when in Government and which has imposed a tremendous strain on Scottish local government. I refer to the derating Act of 1929. Indeed, I believe that the right hon. Gentleman was one of its best advocates. In the city of Glasgow, in which the right hon. Gentleman has the honour to represent a constituency, he would save the ratepayers no less than:1s. 8d. in the pound in rates if the local authority were to be compensated in respect of derating.
One or two observations made by the hon. Member for Edinburgh, South (Sir W. Darling) rather shook me. He referred to what he described as "this very bad Act of 1948"and went on to indicate that it was left to his right hon. Friend the Secretary of State to remedy the grave injustices of that Act. The hon. Member indicated that Birmingham, a city of unbounding prosperity, was receiving £1,300,000 each year in respect of equalisation grants, and that cities in Scotland—Aberdeen, Dundee, Edinburgh and Glasgow, for example—were receiving not a penny. I ask the Joint Undersecretary whether it is not a fact that there is nothing in this proposal that will bridge the gulf between the £1,300,000 which Birmingham is receiving and the nothing that Glasgow and Edinburgh are receiving.
There has been comment regarding the addition of 25 per cent. to the English rateable value for the purpose of calculating the grant to Scottish local authorities. My hon. Friend the Member for Hamilton (Mr. T. Fraser) indicated that 25 per cent. was the generally accepted figure that was used for other purposes in determining grants made during the same period to Scottish local authorities. One must also remember that at the time of the 1948 Act the Government were engaged in the process of relieving Scottish local authorities of millions of pounds of rating liabilities when they relieved them of the responsibility for public assistance and part of the health services.
The 1948 Act was based on a wrong calculation or formula. I am satisfied that it was not produced by any local authority or any association of local authorities, nor by any Minister. Like the hon. Member for Edinburgh, South, I feel that the calculation of the formula was produced by the Department. That is my opinion of the present Bill and it was my opinion of the 1948 Measure. I would go further and suggest that the formula in this Bill is far more intricate, more complex and more ambiguous than anything in the 1948 Act.

Sir W. Darling: I said that this was not a politicians' formula but was the product of the experts. I must not be thought to attack the experts for this reason, because the politicians could think of nothing. Something had to be put forward for our acceptance.

Mr. McInnes: I do not attack the Civil Service or any particular Department for that production. I merely indicated that it is, obviously, produced by them.
We have talked about the intricacies and complexity of the Act, and the right hon. Member for Kelvingrove referred to Clause 4. In subsection (3) we find:
In this section the expression 'the weighted population' means—
(a) in relation to a large burgh, the population thereof plus the number of children under fifteen years of age therein;
(b) in relation to a county, the population thereof plus—
(i) the number of children under fifteen years of age therein, and
(ii) twice the number of persons by which the increase of the population of the county during the period of five years immediately preceding the year in question exceeds one twentieth of the population of the county in the first year of the period of five years aforesaid, and
(iii) in the case of a county the population whereof divided by the road mileage thereof is less than seventy, one third of the additional population needed in order that the population thereof divided by the road mileage thereof should be seventy;…"
I hope that it is the intention of the right hon. and gallant Gentleman the Joint Under-Secretary of State clearly to define that Clause for our benefit. I should also like him to define the meaning of the phrase:
…the constant factor determined for that year by the Secretary of State…


which appears in Clause 4 (2). What is this mysterious ingredient called the "constant factor"? Are right hon. Gentlemen opposite sure that it is not the forgotten factor? As my right hon. Friend the Member for Central Ayrshire said, it might be the landlord—or it might be the constant nymph.
I pay my tribute to the Committee for the way they handled their task. The formula they produced seems to have worked out something like this: they said to themselves, "We have an additional sum of £2 million more available for allocation, so we shall apply the Goschen equivalent of eleven-eightieths of the equalisation grant payable to local authorities in England and Wales." But fundamentally that is entirely wrong. It is contrary to the spirit of equalisation. The idea of equalisation was to distribute grants on the basis of need and not of population.
As I understand the 1948 Act, it was designed to assist by Exchequer grants those local authorities which would be unable to provide or maintain their local services without undue strain on their own local resources. I think that the hon. Member for Edinburgh, South will agree with me that the Goschen formula is a mystical form of calculation. If we are talking in terms of eleven-eightieths, I could argue that Scotland receives far more than its share of the Goschen formula when we consider matters like unemployment, infantile mortality, tuberculosis, overcrowding and the whole degree of social poverty in Scotland as a whole when compared with England and Wales. One could continue. All the indices are a great deal higher than those in England and Wales.
Let us see what happens when we apply the Goschen formula and the formula laid down in Clause 4. I take the town of Kirkcaldy, where the rates are 16s. 8d. It gets equalisation grants equivalent to 2s. 5d. per £ in the rate. Under the Bill, Kirkcaldy's rates will be reduced from 16s. 8d. to 15s. 1d. and it will get another 1s. 7d. per £ of relief, so Kirkcaldy will get about £33,000. The rates at Greenock are 18s. 11d., and the equalisation grant is 2s. Id. Under the Bill, Greenock's rates come down to 17s. 5d. The local authority is given an additional relief, therefore, of 1s. 6d. per £. So Greenock gets approximately £51,000.
I take the great City of Glasgow which houses almost a quarter of Scotland's population. Glasgow does not get one penny of the £2 million; yet Glasgow is perhaps the most heavily-rated industrial city in Great Britain. Glasgow has a rate burden of £11 8s. per head of the population. It gets a benefit of 2d. in the £ in rate, but how and by what mystical means was that achieved under the Bill? It is from the formula that has now been applied in respect of education grants.
By taking the standard rateable value where it is higher than the actual rateable value, Glasgow gets £160,000. But we do not leave it there. We apply the same formula in respect of Part V of the 1948 Act to local authorities which receive payments in lieu of rates in respect of railway and electricity undertakings. Under the provisions of that part of the Act, Glasgow loses £40,000. So, while Glasgow gets nothing out of the £2 million, it gets £160,000 out of the new formula under education and loses £40,000 under the new formula covering rates for nationalised undertakings.
It is abundantly clear to me, despite the complexities and intricacies of the Bill, that the Committee has amended the basis of the education grant so that some local authorities will get more at the expense of other local authorities. They have amended Part V of the Act so that the local authority which at present receives equalisation grant will get greater payments from the railway and electricity undertakings than it has had before. But the local authority which gets no equalisation grant will get less payment from the nationalised industries. That is how it appears to work out.
Under Part V the local authorities will get less from the pool—that is, the block rating grant payable by the railways and electricity undertakings. Then to cover up the position, and so that it would appear to every local authority in Scotland that the idea is that no local authority shouldbe penalised, the Government bring in this transitional Clause which provides that, although there are nearly 90 local authorities which get nothing under the Bill, they are safeguarded and they have the first claim on the £2 million additional which is available. Did the Secretary of State give the House the correct information when he indicated that the first claim on


the £2 million amounted only to something like £200,000? After all, there are something like 90 local authorities involved.

Mr. Stuart: As far as I am aware, that calculation is as correct as we are able to make it at present. I was under the impression that the number of local authorities to whom the hon. Member had referred and who would get nothing was 76 and not90, but that is only a figure out of my head and I am not absolutely certain about it.

Mr. McInnes: That is the procedure as laid down in the Bill for the calculations and formulae under the various Clauses, and it amounts simply to this: that such local authorities as Edinburgh, Glasgow, Aberdeen, Dundee and several others which have no equalisation grants are now being offered, by devious means, a miserable penny or twopence in order to appease any wrath which might develop. That is the economics of Tweedledum and Tweedledee.
May I ask the Joint Under-Secretary of State, who is to reply, one or two questions? May I ask him why consideration was not given by the Committee to the proposition of introducing a formula on the basis of the rating burden per head of population? Secondly, why did not the Committee tackle this question, as the hon. Member for Edinburgh, South said, without any reference of any kind to English rating? Thirdly, why was there not a proposal that some weighting should be introduced to help those areas where the cost of housing is excessive? Surely the right hon. and gallant Gentleman is aware that some local authorities have a rate burden in respect of housing today which is 1,000 per cent. more than their burden in 1939. It was entirely wrong of the Committee merely to indicate in respect of housing that it appreciated the situation and that it should be watched and considered at the next investigation. When is the next investigation to take place? Is it to be when we get the Sorn Committee's Report or have we to wait until the revaluation which has to take place in England and Wales? Or when will it be?

Dr. H. Morgan: Domes day.

Mr. Mclnnes: I think I am justified in asking when the next investigation is to

take place, because it is vital to the interests of Scotland.

Commander Galbraith: My right hon. Friend has answered that question. It is laid down in the Bill that such an investigation can take place at any time, whenever the situation warrants it.

Mr. McInnes: I agree, but I am not being kidded by that. I want something more concrete. Obviously the right hon. Gentleman can do it at any time, but he will not do it until there are some new circumstances on which to act. They may arise from the Sorn Committee Report or from representations in respect of the revaluation in England and Wales.

Commander Galbraith: The hon. Member will grant that there is an improvement. Whereas we have to wait for a period of five years under the existing legislation, we shall be able to make the investigation in future whenever we feel that the situation warrants it.

Mr. Mclnnes: Yes, there is an improvement in some respects but there is a definite worsening in other respects. That is why I say the whole of this Bill is the economics of Tweedledum and Tweedledee. It is no use kidding ourselves; we have improvements but in other respects we have a definite worsening of the position.
Why I ask when the investigation is to take place is because Birmingham and other English cities have been getting millions and millions of pounds of equalisation grants while the large cities in Scotland have not been getting a single penny. Has that to continue for another two or three or four or five years? The longer the next investigation is delayed, the longer will Birmingham continue to receive this money.
It is in the light of all those circumstances that, while we welcome the additional £2 million, we must tell the right hon. Gentleman that the method of allocation of the £2 million does not merit the approbation of those on this side of the House.

6.16 p.m.

The Joint Under-Secretary of State for Scotland (Commander T. D. Galbraith): We have had a very amiable debate and one which has produced a lot of points which we can consider before we reach


the Committee stage. It seems to me that two general criticisms have been levelled against the Government's proposals. The first is on the method of distribution, about which the hon. Member for Glasgow, Central (Mr. Mclnnes) has just spoken with such feeling, and the other is on the amount of money which we have to distribute by way of equalisation grants.
I suggest to the House that those who are criticising the distribution proposed in the Bill of the £8 million which is available are criticising not this Bill but the fundamental principles of equalisation grants as laid down in the Act of 1948. The hon. Member for Glasgow, Central spent most of the time in his speech criticisng that Measure and not criticising this Bill.
After looking at the matter pretty carefully, it seems to me that the principle on which the equalisation grant is distributed is probably more just and fairer than that of any other system which has so far been devised. This Bill merely carries the principle further, and it is therefore even fairer than that which was provided in the 1948 Act.
The hon. Member for Glasgow, Central and other hon. Members have alluded to the great financial burden which is placed on certain of our local authorities as a result of their housing programmes. I acknowledge that at once and it may well be that the day will come when some additional weighting will have to be introduced into the method of distributing equalisation grants in respect of that housing burden. The House surely realises—I am sure it does—that the principle is simply that the State should assist to a greater extent those local authorities whose rateable value falls short of a minimum standard. That is the whole purpose of it; it is intended to assist the weak and the poor and not the strong and the rich. I have always assumed that that was a principle generally accepted in the House.
What was the alternative put forward during the debate? The only real alternative put forward is that the sum available, or at least part of it, should be distributed on the basis of population. I quite well realise that that might enhance

the prestige of some of those who represent the great areas which at the moment are getting no assistance under the Bill or from equalisation grants. It would no doubt be of assistance to some hon. Members, myself included, when we are next under the necessity of seeking the franchise of the electors. From that point of view, I should welcome it very much indeed, but I submit that, on all other counts, such a method of distribution would be very unfair and therefore undesirable in the interests of the country as a whole.
The object of the Bill is to even up much further the rating resources of our local authorities, and I can think of no fairer means of doing it than by the measures proposed in this Bill. If, however, when we come to the Committee stage, other methods of distribution are put forward, I give the assurance to the House that my right hon. Friend will examine them with an open mindand with the utmost sympathy.
Running through a number of the speeches today, there has been a comparison of the position as between Birmingham and Glasgow, and I have been asked time and again during the debate why Birmingham should receive £1 million or £1½ million while Glasgow got nothing. I submit that that is a matter which is outside the purview of any discussion on this Bill, in view of the fact that we are now getting eleven-eightieths of the total equalisation grant payable in England and Wales. Surely it is no concern of ours how England and Wales should distribute their equalisation grant.
If the operation of the equalisation grant principle results in money being paid to Birmingham, even though, in our opinion, that is done to the detriment of other authorities, that is no affair of ours and is not our business. Our business is simply to distribute the sum allocated to Scotland in such a manner as we consider just and fair, which, in my opinion, is just what this Bill does.

Mr. Woodburn: By implication, the right hon. and gallant Gentleman acknowledges that there seems to be an anomaly, and there is no question that that anomaly is disturbing the minds of people in Edinburgh and Glasgow. Having discovered there is an anomaly, would he not like to offer the House some explanation of the anomaly?

Commander Galbraith: The explanation simply arises out of the whole principle of the equalisation grant. We are now distributing in Scotland on the principles of the equalisation grant the money which has been allotted to Scotland for that purpose, and which has been welcomed time and again during the debate. In England and Wales, the money is distributed on the English basis, which was the basis that we had previously, and which we did not like at all.

Mr. T. Fraser: Are we not all responsible, as Members of Parliament, for the public money that we give either to Glasgow or Birmingham, and under whatever Act of Parliament it may be given?

Commander Galbraith: That may be perfectly correct, and the hon. Gentleman may be quite right, but that is not what we are discussing this afternoon. What we are discussing is the Second Reading of this Bill.
The other pint on which there was general criticism was the amount of money we had received, and I would remind the House in that connection that the matter was very carefully and seriously considered by the expert investigating Committee set up by my right hon. Friend to examine the operation of the equalisation grant in Scotland. That Committee was composed of the most eminent authorities on local government finance, valuation and rating in our country, and it included persons nominated by the three local authority associations and officers of the Scottish Home Department, and among its members were the city chamberlains of four cities, the town clerks of small and large burghs and the county clerks of counties. We could not, in fact, have formed a more representative or more highly-qualified body to consider this very intricate matter.
Now, in its examination the Committee obtained evidence which tended to show that the percentage increase necessary to raise rateable value on the English basis to rateable value on the Scottish basis should not have been 25 per cent. but something considerably higher. That evidence, however, the Committee did not find itself able to regard as providing the best comparison between the English and Scottish levels, and the Committee gave detailed reasons why it could not accept it. In that regard, I would refer

hon. Members to paragraph 7 of the Committee's interim Report.
The Committee came to the conclusion that 25 per cent. was too low, but it was unable to suggest any reasonable alternative other than the Goschen formula, and I would say to the House that, where experts such as these who formed that Committee, after factual and objective study, came to that conclusion and advised that the Goschen formula should be adopted, we would be somewhat rash to turn down that advice unless we had at least some other reasonable alternative to offer.
Of course, as I am sure the House will agree, it is a human failing that, when we receive something we like, we always want some more of it, and I fear that that is what has come up time and again in this debate. I feel very strongly that, rather than criticising, hon. Members ought to be congratulating my right hon. Friend, than whom none is more active in the interests of Scotland, on his success in convincing the Chancellor of the Exchequer that the existing formula was not working out fairly as far as Scotland was concerned, and on obtaining from him an additional £2 million, which, let me say, was given with good grace and which will very greatly help our local authorities whose money resources are below the standard and whose need is great.
A great deal has been said today on the great complexity of this Bill, and I would agree. To endeavour to read the Bill, with all its references and cross-references from one Clause to another, and, indeed, to previous Acts of Parliament, is a most bewildering undertaking, and I wonder whether I might venture to try to put to the House in my own way how the provisions of this Bill will work out in practice. When I put it to myself that way, I find that I understand it, although it may be that hon. Members will not understand it. However, perhaps they will allow me to try.
In doing that, we have to start off from the existing position under the existing law, under which we in Scotland receive grants under the formula of rateable valueper head of weighted population for England and Wales, plus 25 per cent. Having applied that formula in Scotland, we are in the position of rendering an


account to the Exchequer, and requesting payment. The change that has come about is simply that we do not now present an account, but we are given a sum of money which we have to assimilate under the Bill.
I have been asked a number of times during the debate what on earth is this so-called "constant factor." It so happens that there is no known method of arriving in one operation at a figure which will assimilate the whole of the money which we are given to distribute under the equalisation grant. What we have to do is to proceed by a system of trial and error. We take one figure, and, if we find out that all the sum available is not taken up, we take another, and if we find that takes up too much, we have to go on until we gradually reach the figure where the whole of the grant is taken up.
Having found that figure, we then ascertain the weighted population of Scotland, and we divide the constant factor, as it is called—which is really a notional rateable value—by the weighted population of Scotland and we arrive at the figure of the standard rateable value per head of the weighted population.
To put it into figures, the notional rateable value, or constant factor, is £55,890,000-odd, and the weighted population is 6,494,000 and some odd units. The standard rateable value per head of the weighted population is £8·606 and some more decimal points. Having ascertained what the standard rateable value per head of weighted population is, we can then find the standard rateable value for any local authority whatsoever merely by multiplying the weighted population of that local authority by the standard rateable value per head of the weighted population.
As an illustration, let me give the figures for Peterhead. The weighted population amounts to 16,927. Multiplying that figure by £8·606, we arrive at a standard rateable value for that burgh of £145,678. That gives us the standard rateable value. We pay Exchequer equalisation grant to all those burghs whose rateable value as adjusted, as laid down in the Act, is below the standard. Those which are above the standard naturally get nothing. The gap between the rateable value of the burgh and the

standard rateable value is the credited rateable value on which the Exchequer pays rates.
I hope that I have succeeded in explaining some parts of the Bill. That is how the matter works out in practice. Now I am prepared to answer some of the questions which were put to me.
The hon. Member for Hamilton (Mr. T. Fraser) said that the impression given by the White Paper and by my right hon. Friend was that the effect on the rates was entirely the result of the new grant. In that connection I would refer him to paragraph 11 of the White Paper, where he will see that that is not the case. Another question or suggestion that he put to me was that compensation should be paid for derating losses. That point was frequently put. Let me remind the House of what actually happens. Under the Local Government Act, 1929, the block grant was introduced and included estimated losses on rates due to derating. That system remained in force until the coming into operation of the Local Government Act, 1948.

Mr. L. M. Lever: And unemployment.

Commander Galbraith: I am not going into all the factors but am merely dealing with one matter on which a question was addressed to me. I hope that hon. Gentlemen will not expect me to stand at the Box and say what all the factors are, and that my explanation satisfies them that I know what the constant factor means.
I was asked by the hon. Member for Bridgeton (Mr. Carmichael) to indicate whether I expected that the Sorn Committee would remain in being until revaluation was made. I should say that the answer was "Certainly not." He asked whether eleven-eightieths was a good yardstick. Up to the present I do not think we can say that it is bad, because it has given us another £2 million. He asked whether housing should be taken into account. I have already answered that point when I intimated that at some future date it might not be unreasonable to introduce weighting for housing into the calculation.
I was rather shocked and surprised that my hon. Friend the Member for Edinburgh, South (Sir W. Darling)—and


incidentally other hon. Members when making their speeches—seemed to put the blame upon the Scottish Office for certain things that happened. Any blame, as the House knows, does not attach to the Department but to my right hon. Friend and those who sit with him on the Government Front Bench.

Sir W. Darling: I only suggested that the formula which he admitted was complicated, was unworkable. I was not suggesting that that was due to my right hon. Friend or to my right hon. and gallant Friend, but to people who, to the best of their ability, did the best they could for their masters.

Commander Galbraith: I am very glad that the hon. Gentleman has said that, because he has removed from my mind the suggestion that he was attributing blame to the officers of the Department in St. Andrew's House. The hon. Member for Midlothian and Peebles (Mr. Pryde) asked that the Government should withdraw the Bill. I do not think the hon. Gentleman had better go back to Scotland and to his own constituency and say that he has invited the Government to withdraw a Bill which gives to Scotland another £2 million to meet the expenditure of the local authorities.

Mr. Pryde: If the right hon. and gallant Gentleman will guarantee that Midlothian and Peebles will get something substantial out of the Bill, as has been enunciated, I shall be very pleased. If the right hon. and gallant Gentleman will turn to the White Paper he will find that Peebles, the town with the highest rateable value per head of the population, is getting a penny in the £, and that the town of Dalkeith, with its fine record in housing and low rents, gets nothing. We must take the Government's assurances that they are going to act in a corrective and amending fashion with some degree of circumspection.

Commander Galbraith: The hon. Gentleman knows that a penny is better than nothing. He also knows that the purpose of the Bill is not to assist local authorities whose rateable value is already above the standard. He will have observed in the Bill provisions for weighting which make allowance for a change in population, and they may well apply in his own constituency.
I have answered to the best of my ability many of the questions which were put to me, and I now ask the House to give the Bill a Second Reading.

Question put, and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee.

Orders of the Day — LOCAL GOVERNMENT (FINANCIAL PROVISIONS) (SCOTLAND) [MONEY]

Considered in Committee under Standing Order No. 84 (Money Committees).—[Queen's Recommendation signified].

[SIR CHARLES MACANDREW in the Chair]

Resolved:
That, for the purposes of any Act of the present Session to make provision with respect to the payment of Exchequer Grants to local authorities in Scotland in lieu of the grants payable to such authorities under Part II of the Local Government Act, 1948, and, among other things, for purposes connected with the matters aforesaid, it is expedient to authorise !he payment out of moneys provided by Parliament, in respect of the year beginning with the sixteenth day of May, nineteen hundred and fifty-three, and of any subsequent year beginning with the sixteenth day of May, of grants to local authorities in Scotland amounting in the aggregate to a sum equal to eleven-eightieths of the total amount certified by the Minister of Housing and Local Government to have been paid in respect of the twelve months ending on the thirty-first day of March falling within the year in question to local authorities in England and Wales by way of Exchequer Equalisation Grants under Part I of the Local Government Act, 1948.—[Mr. J. Stuart]

Resolution to be reported Tomorrow.

Orders of the Day — CINEMATOGRAPH FILM PRODUCTION (SPECIAL LOANS) BILL

Order read for resuming adjourned debate on Question [20th November], "That the Bill be now read a Second time."

Question again proposed.

6.37 p.m.

Mr. Harold Lever: As I was saying, the Bill is peculiarly a non-party matter, because we are surely all concerned that there shall be proper examination of the financial proposals. I am fortified that, through the determined action of more than five-sixths of the Members of this House, the House has now an opportunity of reviewing the matter with more consideration than was intended by the Government.
I think it right to commence my remarks, which I hope will be received in a proper frame of mind, by saying that it was never my intention to cripple the time of the House or to obstruct Government business for the sake of obstruction, but merely to achieve the purpose which has been achieved. The Leader of the House, who has been most generous in this matter, is most chivalrous, considering that he was the one most inconvenienced in the matter, in giving us an opportunity now of doing what ought to have been done in the first instance, considering this matter on a proper day of the House of Commons.
In the course of my address to the House on Friday, I observed that there was a growing interest in points of detail, and I was constantly pressed for answers, which I shall do my best to supply in the course of my address tonight; but I should like the House to know that it is not my intention to be in any way tedious in the matter.
It also came to my notice over the weekend that the hon. and learned Member who is to reply for the Government said when this matter was last debated and when I ventured to voice a contribution in criticism of the Bill:
The hon. Member for Cheetham (Mr. H. Lever) showed a rather refreshing concern for public money."—[OFFICIAL REPORT, 28th February. 1952; Vol. 496, c. 1524.]

I hope that I was at least as refreshing on Friday, but if the hon. and learned Gentleman was refreshed by anything that I said, I am bound to say that he dissembled it very effectively.
I give notice that I shall protest very forcefully if nothing is done about the points I raised. I should also like to say, so that my remarks may be properly understood, that I am not speaking either out of malice or affection for any person, but because I feel now, as I did when it was last debated, that the matter calls for a great deal more careful examination than it has been given on any occasion when it has been discussed.
We seem to have a sort of inter-party Hallelujah Chorus as each side applauds the improvident action of the other. I think we must examine once again what is being done in our name. I have addressed a number of Questions to the Minister, and I hope that he will be able to give the House specific answers to what I consider to be extremely relevant questions.
The first question I have to ask him is what directives at present govern the Film Finance Corporation in the conduct of its business? I have not the faintest idea what principles govern the present operations of the Corporation. Does it depend on the whim of the particular chairman at any given time, or upon some directive concealed from us?
What the House has forgotten is that as each party comes for a further dollop from the public purse hon. Members are told something different from what was said when the Bill was brought in the first time. I will read to the House what was said when this Bill was first brought in. I am certain that it has been forgotten by hon. Members, as otherwise it would have been pressed home upon the Government and Questions would have been asked about it. When permission was obtained in 1948 to set up the Film Finance Corporation, the House was told that there would be a collapse of the film industry in this country unless finance was forthcoming.

Sir William Darling: By whom?

Mr. Lever: By the Government in the form of the Film Finance Corporation. Some finance had been provided by the


then President of the Board of Trade, and that this was a completion of those emergency measures. My right hon. Friend the Member for Huyton (Mr. H. Wilson), the then President of the Board of Trade, after saying:
This Bill is a necessity—but, in my view, a regrettable necessity.
went on to say:
The scheme set out in the Bill starts from three points. First, we consider it essential that working capital must be found to enable the industry to carry out the production programme of which it is capable. Secondly, I think it is necessary to affirm that the industry's financing must be of an entirely self-liquidating basis. There must be no question of a subsidy for film production.
The House will observe that all that has been abandoned. All this talk about an emergency, a self-liquidating loan and no subsidy has been abandoned, because this Bill completes the full cycle. First of all, the emergency has become something permanent, and, instead of pretending that the money is going back to the State, we are being asked to make provision for the abatement of Government claims. My right hon. Friend went on to say:
Thirdly, that the special emergency arrangements proposed here should be temporary, and that in a reasonable period when the industry has built itself up again, it should be able to float itself free of the special arrangements and revert to more normal methods of financing.
What is a temporary period? The then Minister regarded a year as a temporary period, because 18 months later my right hon. Friend said specifically that this was no substitute for a more fundamental solution of the problem. He said that pending the more fundamental attack which would have to be made on the problems of the film industry, it was proposed to limit the additional finance available to the Corporation to £1 million.
There has been no fundamental attack since then except on the taxpayer's pocket, and that was for another £2 million in 1952, an attack which was far more accurately directed than any attack upon the problems of the industry. In case it might be considered that this was an ill-considered word on the part of my right hon. Friend, he went on to say:
The film industry is, of course, engaged primarily in the business of popular entertain-

ment—and when I say popular entertainment, I am not excluding, of course, the great educational and cultural aims of the film industry; but they are subsidiary to the main business of the industry. That means that the box office is from the point of view of the industry the final judge of art. I know that in saying that I shall be written off as a Philistine.
My right hon. Friend may now have qualified himself for a more attractive epithet than the one he justified by his then attitude, but at all events he has changed his tune. He went on to say:
The money that is being provided is limited to £5 million, and the duration of the scheme is limited in time. All loans must be repayable within five years"—
that is now—
and after five years from the passing of this Bill new lending must cease. These limits were, of course, set quite deliberately. The industry must so manage its affairs that in five years' time it can raise money on its own credit in the normal way, just as any other industry needing large-scale finance must do The Government have no intention of subsidising the film industry. I have said that on a number of occasions, and I hope that fact has been well marked in the industry itself.—[OFFICIAL REPORT, 2nd December. 1948; Vol. 458, c. 2183–88.]
My right hon. Friend is no longer to blame because he has not the conduct of affairs today. He said that in 1953, had he been President of the Board of Trade, he would have brought the matter to an end, judging by his then expressed intentions. It is to be regretted that he has not complained that his original intentions, which were sound, were not operated by this Government. But as he has not, it has fallen to me to go into the matter perhaps in rather closer detail than I would otherwise have done.

Mr. Harold Wilson: My hon. Friend was good enough to tell me that he intended to proceed on these lines, but as he is suggesting that when I spoke on Friday I did not attack the Government for their failure to bring the Film Finance Corporation to an end after five years, perhaps it would be only fair for my hon. Friend to point out what I said on a subsequent occasion to that from which he has just quoted, when I said that I had come to the conclusion that the Film Finance Corporation should be a permanent part of the financing of the film industry.

Mr. Lever: If that is so, then I am bound to say that I did not hear it, and


if it was said, then my right hon. Friend obviously showed on Friday that he does not share the views which he held when he persuaded the House to vote it into existence, and obtained £5 million for the purpose of financing it.
I find myself in a paradoxical situation. I never thought that the time would come when a Labour back bencher would have to stand up and castigate a Tory Minister for unsound finance. But these things happen, because there is a too-ready agreement between the two Front Benches about legislation which has not been adequately considered. When the Bill was first brought in, the present Colonial Secretary, the right hon. Member for Aldershot (Mr. Lyttelton) said:
I am very glad that the President of the Board of Trade has in more than one part of his speech expressed himself as being rather shocked that the taxpayers' money should be committed to risks of this kind."—[OFFICIAL REPORT, 2nd December, 1948; Vol. 458, c. 2196.]
Of course, the sense of shock departs the more often one is outraged, as I understand it. and perhaps the right hon. Gentleman and the Minister who is to reply tonight will show us that there is some substance in that supposition.
The right hon. Gentleman went on to say, that he did not want to stress the point too much, but that it was very important that the industry should trade at a profit. He said that his hon. Friends were in some doubt whether they should divide against the Second Reading of the Bill. The right hon. Gentleman was in doubt five years ago whether we should have £5 million, but now the Ministers are arm in arm with him in coming to the House, not only to support the use of £8 million, but to support its use for another three years, and to support giving it away to film producers who would find it inconvenient to repay it to the Government.
Anyone who will take the trouble to read the debate on the Bill instituting the Film Finance Corporation will see I, a lone heretic today, am expressing the views universally popular at that time on both sides of the House. I observe that even the then hon. Member for Wood Green, now Wood Vale—I am corrected—Southgate (Mr. Baxter)—made a very

interesting speech when the Bill was before the House in 1948. He said:
This is a strange Bill.…I agree that this Bill is not big enough to be of any importance I do not like to see the Government entering into the film industry. From this faltering beginning they could find themselves having to go further into it to begin to control production policy, and then on to nationalisation—a rake's progress that will be logical and inevitable. The Government have said many times, 'This is only a small Bill,' which it is, but it travels in the wrong direction. I agree that the industry, with its vast income, ought to be able to finance itself. While the Opposition are not opposing the Bill, I believe it is inadequate, a mistake, that it will not help the really independent director and producer and will certainly result in a loss to the Treasury."—[OFFICIAL REPORT, 2nd December, 1948; Vol. 458. c. 2209 and 2213.]
I read that speech, and I read the hon. Member's speech on Friday, and I am bound to tell the House that the hon. Member has been consistent only in his jokes. I notice his jokes are the same though his views are different, and I thought it only fair to say that there is partial consistency on the part of the hon. Member, who ventured to accuse me on Friday, with far less justification, of misleading the House.
That is how the matter stood in 1948, and how the matter was, if I may use the expression, "put over" to the House, but the position in which the House now finds itself is that it has to decide what to do about it. The House was then told that this was a shield under which the Government would prepare a policy which would produce a viable industry in this country. No policy has been produced, except for the Eady Plan, which played a useful part, but even there it is complained that the industry has not been properly self-supporting.
I ask the Minister, in regard to the question, "What is the directive which at present governs the Film Finance Corporation in the conduct of its business?", whether it is the conduct implied in the speech of my right hon. Friend in 1948, and if not, what is it? I also want to ask whether the three years' extension proposed is meant to be final? I ask that because we are constantly put off with further and further extensions, in order to give the Government time to make up their mind, but the Government are not entitled to buy time in this expensive way.
Next, I should like to ask the Minister what is the Government's estimate of the


actual cost today of the operation of the National Film Finance Corporation, as opposed to the figures as they appear in the Report? What, in the Government's estimate, is the actual cost—or do not the Government thus deign to estimate what it costs? We are entitled, as the House of Commons, to know what is the benefit. We have had a lot of talk about the benefit. The hon. Member for Wood Vale—Southgate—

Mr. Beverley Baxter: On Friday the hon. Member was good enough to refer to me as the Member for Wood Green, Southgate and then Wood Vale. I do ask him, in order to ease the burden of the reporters upstairs, to note that it is Southgate, as far as I am aware.

Mr. Lever: The hon. Member has so many facets to his personality that perhaps I may be pardoned. He did not always take the humane and artistic approach to industry, but on Friday he said, looking at the illuminated ceiling as if looking towards his ultimate destination, "Why cannot we have the beautiful and artistic productions that are going round the Empire? Never mind the cost." That may have had reference to his special interest in the Empire, which is very understandable, but, however beneficially and however picturesquely the benefit is put, we are entitled to know how much we are to pay for that benefit on which Members tirelessly expatiate.
I should like also to ask the Minister what is the Government's estimate not only of the actual cost, but the future cost, of the concessions that are going to be made if this Bill becomes law. I should like to ask the Minister whether, in his opinion and that of his advisers, the Corporation have the statutory powers to advance money to the film industry without the bona fide expectation that the money can be recovered. In other words, can the Corporation, under the powers governing it—and the Minister must have far better legal opinion than is available to me—deliberately lend money intending to lose it, or knowing that some part of it will be lost? I think it very doubtful.
If the Minister cannot tell me, or has to tell me when he replies, as may well be the case, so far as anyone has told the House, that the Corporation has no

statutory right to hand out public money without reasonable expectation of recovering it—and we all know that it has handed out money without the expectation of fully recovering it—then it is very doubtful whether it has even been lawful in doing so. I want the Minister to pay some attention to that point, because the Government are responsible for seeing that its creatures obey the law in this regard. I want to know whether the money, lent without expectation of full recovery, has been lawfully lent, and whether the Minister intends to exercise control over future lending in order to ensure that it is lawfully done.
The Minister has a responsibility to the House. He may not have power over the Corporation but he has a responsibility to the House. I think it was the late Lord Baldwin, when Conservative Prime Minister, who drew attention to the fact that power without responsibility was the privilege of the harlot, but the President of the Board of Trade is in the reverse and less enviable position of having responsibility without power, which, I should have thought, was the privilege of the eunuch, where a certain amount of impotence is regarded as a matter for promotion, rather than for a reduction to the ranks. But, from the public point of view, it is not desirable that we should have a Minister introducing a scheme in which he has a responsibility to the House but no power to see that the money is lawfully expended.
I should like to ask the Minister some more general questions. What is the Government's position so far as the concessions provided in Clause 2 are concerned? Have any tentative arrangements been made for any person to operate those concessions before they are made known to the House of Commons? The reason I ask that question is that after the debate I heard something which indicated that the chairman of British Lion had already been thinking, by a happy coincidence, along the lines on which the Government had been thinking in providing this concession Clause.
I should like to know whether there were any discussions, what they were, and why they were not brought to the attention of the House. The House will realise that if there had been discussions, it is an elementary principle that the


President of the Board of Trade shall be as candid with Members of the House of Commons as the chairman of British Lion is with his shareholders. We are entitled to know what, if any, negotiations have been going on to give effect to the concession of public money provided for in Clause 2 (1).
I should like to know whether any general directions have been prepared and given to the Film Finance Corporation on how it is to operate this concession-giving Clause if it is passed into law by the House, which I sincerely hope it will not be, though I gather that the Government presume it will be, not because it will carry the logical support of the House behind it but because, as a famous civil servant in the 18th century used to say when faced with a hopeless case, "We must apply our majority to this question." I am afraid that that is what the Government are relying upon to get this Clause through.
I must ask the Government another question to which I promise I have given my most earnest consideration, and it is this. Does the Minister approve in principle of a person or firm acting in an advisory capacity to the Corporation and also being a borrower from its funds? So that there shall be no misunderstanding, I want to make plain that I refer to Sir Michael Balcon. Far from making any aspersion on that gentleman, although I do not know him personally I am aware that it is the universal opinion in all parts of the House that he is a most distinguished figure in British film production, and, without any doubt whatever, he has done more for the benefit of British films than any other producer in this country. What is more, he shares my own penchant for sound finance in the arrangement of his affairs, unlike some of the more optimistic film producers.
I have not the smallest intention of defaming or denigrating Sir Michael, but I feel it my duty to press the Minister for an answer as to whether he deems it right and proper that a man should occupy the function on the one hand of adviser to the Film Finance Corporation disposing of millions of the public money, and, on the other hand, either personally or through his firm, be a borrower from that fund. It obviously is not to be tolerated that a man should sit in judgment upon

his own commercial rivals' work, however honest he may be and however concerned he may be with the artistic side of film production.
It is also obvious that there cannot be in the public mind the feeling that when he comes as a borrower, his applications will receive the same detached consideration as anybody else's application. Sir Michael has done a great service to the industry and the Film Finance Corporation. I have no wish to injure the gentleman's reputation, but I believe the Government should make it plain that he should cease to embarrass himself by continuing in this position.
Do the Government still maintain that the film industry is in a state of temporary financial crisis? This is a complete fallacy which has dominated all the actions of the Government in bringing in this legislation. They always seem to imagine that the industry is about to emerge from a temporary crisis, but the film industry is not in a temporary crisis. It is chronically unable to pay its way unless the Government assist it to do so. So long as the Government go on pretending that these are temporary financial crises, and continue to provide the kind of finance which might be appropriate for temporary financial crises, the film industry will be placed in the situation whereby Ministers in both parties have to come to the House and talk of this industry as if it were a pauper industry.
As long as the industry is financed in this way, it will not only be a pauper industry in which the most efficient producer will not make a claim on public funds, and the less efficient the producer the bigger the claim on public funds, but there will be a great deal of heart-burning among the producers themselves when, for no apparent reason, different concessions are made to different producers.
We do not want a pauper film industry. We want the industry to have a proper basis on which it can permanently establish itself. This sort of basis is admittedly unstable, and it will lead to the kind of debate that we have had over and over again, in which Members are liable to criticise all sorts of aspects of the industry. You have ruled, Mr. Speaker—and far be it from me to question your Ruling—that we all have the right to criticise each and every servant of every company which borrows money from the


Corporation. We started on Friday discussing who would make a suitable chairman for British Lion and who would make a suitable chairman of some other company. We can end up by discussing whether the actresses are suitably chosen, whether enough brunettes or blondes are chosen in order to ensure a profitable film.
I am far from wishing to damage the film industry. I wish to put an end to this pauperisation of the industry which the idleness and indifference of the Government are perpetuating. This is only because the Minister cannot get time off to go and see what is happening in the film industry. I do not pretend to be an expert on the film industry. I do not know enough about it. But I do know enough to be convinced that as long as this sort of finance is employed it will continue to be a pauper industry, continually being discussed in this House as it has been on previous occasions. There will be no incentive to the efficient producer because his only reward will be to obtain less from the public funds than the less efficient producer. That is no incentive. The producer should be given a chance to earn a profitable livelihood.
I have been asked what is my solution to the problem. I do not know whether I should be in order in mentioning it, but there are positive measures which could be taken to see that the present distribution monopoly is broken, to see that the producer is given his fair share of the enormous box office receipts even if this meant a concession in Entertainments Duty. We ought to give the producer a chance to survive in a normal way and not in this unseemly and undignified way, which reflects not only on the industry but on the idleness of the President of the Board of Trade and his Parliamentary Secretary, who seem merely to sit here instead of using their brains. They remind me of Lord Chesterfield's famous dictum in another place, when he said "We, my Lords, may thank Heaven that we have got something better to depend upon than our brains." The President of the Board of Trade is in the same unfortunate situation. Neither he nor his Parliamentary Secretary are making a proper and industrious effort to do the job that they were placed in those position to do.
Another thing that the Government must tell us is what is in their minds

when they support the film industry. It is all very edifying, although it resembles a chapel service rather than the House of Commons at its brainy best, when we hear on both sides a good deal of talk about lofty artistic impulses and national prestige. It is all very edifying, but it does not get us very far. We ought to know why we are financing the film industry.
I am going to suggest three reasons why we should support the film industry, and we should separate those reasons. There are only three reasons; one is popular entertainment, the second is the cultural value of films, and thirdly the dollar saving aspect of the film industry. It is the confusion of those three reasons with which I am concerned, and the Government must approach this matter in a sensible way. They must not take umbrage if I express myself forcibly. I assure the Minister that I intended no discourtesy to him on Friday and I have not the slightest intention of being discourteous to him now. If I express myself forcibly it is because I wish to drive home points in which I believe, and I have no personal rancour for him or his colleagues who are in a situation which is not altogether of their making.
These are the three reasons for financing the film industry, and nobody has yet attempted to separate them. Let us look at the question of popular entertainment as a reason for supporting the industry. We cannot go about subsidising the industry on that ground alone. At least, there is a great danger in doing so, because it may cease to be one by reason of competition from other and newer industries, such as television.
As one hon. Member pointed out, there was a time when public torture was regarded as popular entertainment, and when a number of men, including incompetent and negligent Ministers, were taken into the market place and tortured. The people who were maltreated by them and who suffered from their negligence and intolerance at least got the satisfaction of hearing the groans of anguish as the torturers performed upon them. I am far from suggesting that we should have a public torturer of the National Film Finance Corporation for the purpose of keeping it in order. By the effluxion of time films may be overridden by more


modern entertainment. In subsidising popular entertainment, we must be careful that it is current and popular and is not being driven out by new and better inventions.
Then we are told that we have to subsidise the industry because of its cultural value. I do not know much about the industry or its personnel, but from time to time I have seen them at gatherings to celebrate various trade functions, and nothing has yet occurred to make me regard the personnel of the film industry as I regard professors of Oxford or Cambridge University, for their cultural value.
This policy comes ill from a Government who have disbanded the Crown Film Unit, which has produced many wonderful documentary films which have been regarded as of real cultural value throughout the world. They destroyed that very valuable national asset and they did it ruthlessly, against the protests of their own intelligent Members, including the hon. Member for Southgate—if I have got it right this time. The most impartial and intelligent supporters of the Government begged the Chancellor of the Exchequer not to destroy this national asset and yet, after doing so, the Government have the impertinence and the effrontery to talk of the cultural value of the film industry, and to say that that is the reason for lending £3 million to the British Lion Film Corporation and for producing a Clause to write down and write off the loans made.
Next, we are told that the film industry is a dollar saver. There are a great many other dollar savers, and until we know how many dollars we are saving and how much it costs to save those dollars we are not in a position to judge whether we should go on saving dollars through films, subsidise the television industry, or pass the subsidies to some other industries which are dollar earners.
It is lamentable that the British film industry should not be given the chance to be allowed to find its own feet. I am sure it has values which are worth preserving, but the Government are doing it an ill service by continuing to finance it in this way. It is a breach of faith on their part, when my right hon. Friend, who started this payment, did so with the intention that it should not be a permanent provision.
It is a wrong approach and a piece of muddled thinking on the part of the Government. They fail to realise that there is a limit to the national resources, and that when public money is spent some regard should be had to what benefits are produced and the question whether one is solving the problem which one has set out to solve. We should not deceive ourselves with the comfortable illusion that we can solve the problem by writing out another cheque. That sort of approach has led to the provision of "smog" masks from the National Health Service, instead of an air-purifying scheme; it has led to the provision of the epileptic orange beacons instead of a proper road safety policy. That is why we get this film finance policy instead of an intelligent policy which would put the industry into a viable condition, so that it could earn its own living, honourably and reasonably, without pauperisation under this unsavoury and unattractive scheme.
One of the reasons I find it hard to protest with less than indignation about what is being done is that there are other competitors for the money which the Government are so lightly casting away without adequate safeguards. I think of the slum schools in my constituency which, for the want of a lick of paint, are a disgrace to send children to. I think of the other cause which hon. Members opposite supported yesterday, when we were told that, for the sake of a few hundred thousand pounds, the Government could not do the decent thing for people who had fought for their country.
At the same time, they can lay out these vast sums for the film industry. We ought to have regard to alternative claims for public finance. It is surely wrong and idle on the part of the Government to pauperise an industry, because it leads to a state of chronic uncertainty. The industry will never know where it stands until it is allowed to earn its own living in a reasonable way, instead of by this unsavoury and unsatisfactory method of finance which the Government are seeking to perpetuate in this Bill.

7.17 p.m.

Mr. Stephen Swingler: My hon. Friend the Member for Cheetham (Mr. H. Lever) has given a brilliant performance, probably far better than anything produced by the


British Lion Film Corporation, and certainly much longer. Although Iwas one of his victims on Friday, I congratulate him most warmly. But I still have one complaint. After he had been speaking long enough to fill 50 columns of Hansard I was able to ask him what was his policy. Thereupon the Deputy Chief Whip moved the Closure, so that my hon. Friend was prevented from outlining his alternative to the policy which he had been analysing for a period of two hours and 20 minutes.
Although my hon. Friend has probably added at least another 15 columns to Hansard, I still cannot discern his alternative to the policy which, as he rightly said, has been so complacently supported by both Front Benches in connection with this Bill. There is a lot in what my hon. Friend has said. I agree with him that on Friday this Bill was received far too complacently. Members on both sides of the House expressed themselves in what I can only regard as a completely defeatist manner in their attitudes towards the financing of the British film industry.
My hon. Friend drew attention to the fact that the Government refused to find money for very many necessary and desirable objects, but are prepared to come forward with a Bill to throw some more money down the film production drain. It seems to me that no vestige of a policy whatsoever was presented to us to meet the parlous situation in which this industry exists. On Friday, one of my hon. Friends drew attention to the summary of the situation in the last Annual Report of the National Film Finance Corporation. All the understatements of that Report could not disguise the fact that the film industry simply staggers from crisis to crisis, and that no solution is being produced, either by the leaders of the industry or by the Government, to meet the basic problems.
The facts are that the market for films is very unsettled and is falling, and the 30 per cent. British quota is increasingly flouted. But the Board of Trade refuses to produce a realistic quota and makes no serious attempt to enforce the quota which it maintains, or, if it does attempt to do so, it gets its fingers badly burnt, so that the quota is largely ineffective.
The production of films is, in any case, quite insufficient to meet the quota, but nobody seems to worry about the situation. We go on year after year accepting a so-called quota for the showing of British films to encourage the British film production industry, but there are just not enough films being produced, in spite of all the loans and subsidies, to enable exhibitors to meet the quota. So, a large number of exhibitors default on the quota; but nobody worries, because no attempt is made to enforce the quota, and so a series of Measures are openly flouted by those concerned, and the industry staggers from crisis to crisis.
The most amazing thing in this Report is the statement of the National Film Finance Corporation about the number of films produced and released that are likely to be profitable. I should like to remind the House that, according to the Corporation's estimate, of the 34 films released in 1952 the number likely to be profitable, that is, likely to pay the producers for what they have laid out, without the Eady plan is eight, and with the Eady plan 15.
That is to say, less than half of the films are likely to get the money back even with the Eady plan, which is becoming increasingly unpopular for reasons well known to the President of the Board of Trade. If we did not have the Eady plan, if we did not have the levy running through the industry, less than a quarter of the films produced and financed by the Corporation could pay their way.
That is the fact that we ought really to be considering in connection with a Bill which is complacently presented as a Measure to tide the industry over for another few years by pouring another few millions of pounds of public money down the drain. I agree with my hon. Friend to this extent, that we ought to face up to one of three alternatives.
First, we could accept openly and honestly that we are nationalising the losses—for that is the position at the moment—and allowing the profits to go to private enterprise by this system of a disguised subsidy, of pumping money into the Corporation which pumps the money out to producing companies, who then make the inevitable losses that everybody knows they are going to make


because of the crazy situation in the industry; and we write those losses off.
Secondly, we could nationalise the lot, nationalise the producing industry. If we are nationalising the losses there seems to me to be a good deal to be said for nationalising the industry and running it as a public enterprise, though I know that I shall be unpopular for saying it. That is the implication of the speech on Friday of the hon. Member for South-gate (Mr. Baxter)—I am sorry he has gone away—who said that films should be produced not to pay commercially, not to pay their way, but because they were a good thing for the country and a good thing for the Commonwealth, and that there should be subsidies out of public funds without regard to whether we could gel the money back that was laid out.
If that is to be the policy we should have the courage of our convictions and say that the whole thing should be run as a public enterprise, and the money could be paid over from the Treasury, and then we could run the industry and produce films without regard to whether we were going to get the money back or not, and without making any particular attempt in that direction. However, that, of course, is not honestly admitted. The facts are disguised under a great number of complacent phrases about producing plans for the industry to deal with this crazy set-up.
The third alternative is to do something, if we are not going in for a policy of genuine public enterprise, to promote film production—because we think it a good thing for the country—by trying to make production pay, in order to give the producers of films the chance of getting their money back and give the Corporation the chance of getting its money back. That, in my view, is the policy we ought to adopt, because we are not going to adopt the policy of nationalisation and it is a bad thing to adopt a policy of simply nationalising the losses on film production.
The only way to do that is by discriminatory taxation. The only thing to do is to adopt the sensible policy the Italians have adopted and to make profitable the production and exhibition of British films, which cannot ever be put on the basis of equal competition with American production because of the vast

American market, by introducing discriminatory taxation in favour of the exhibition of British films so that the producers of British films may be able to get back more of the money that comes through the box office than they can get back now.
The Board of Trade has had a scheme on those lines submitted to it very recently, and it has passed that scheme on to the Treasury, and all the usual hullabaloo is being raised about this being contrary to G.A.T.T., and all the rest of it. There are many things going on that are contrary to G.A.T.T., and if we are to protect in a special way certain industries in this country, then I believe that of almost all the industries the film production industry has the most powerful claim for this kind of protection because it cannot, owing to the economic facts of life and the state of the British market of cinemagoers compared with the American market of cinemagoers, compete on an equal basis with Hollywood. It is quite impossible.
Therefore, if we seriously want to promote the exhibition and production of British films and give a chance to British film producers to get back the money which this Report shows they cannot get back even with the Eady plan the only way to do it in present circumstances, I believe, is to introduce a lower rate of Entertainments Duty on the exhibition of programmes of British pictures compared with any other kind of pictures. Then the extra profits that would be made at the box office on the showing of British pictures could be divided between the exhibitors and the producers in the industry so as to give some chance to the producers of the pictures, whether good, bad or indifferent, to get their money back.
The fact is that today, however good a large number of the pictures are—and the films listed in the back of the last Annual Report make one proud, to some extent, of what the British film industry has done during the past few years—on some of the very best of those pictures the producers have no hope of getting their money back owing to the division of the spoils within the industry, a very heavy rate of taxation on entertainments, and, I agree, to some of the lavish setups that have existed in some of the film companies. Therefore, I think that it is quite right that some protest should


be made about this Bill and the continuance of other expedients without any really serious review being made of all the actions taken in the name of promoting British film production.
Personally, I think that the whole setup is idiotic. The quota does not work. Film production is stagnant. The facts of film production are completely in contradiction to the facts of the quota. We lend money to try to subsidise the production of films, but no measures are taken to try to get the money back from the other end. The State takes an enormous amount of money from the box office end of the business in the form of Entertainments Duty and puts a little back at the other end in the form of the National Film Finance Corporation. There is no rhyme or reason about the whole situation and no kind of a policy for trying to put British film production on its feet.
I want to know, therefore, what is the Government's view of the situation. Is it their view that film production should be permanently subsidised out of public funds without any hope of getting the money back? That is what the presentation of this Bill suggests. Is it the Government's view that there should be more or less public enterprise in the business? We must seriously protest at the idea that the Government are to make up the losses on film production, but are to have no say in any profits which may be made. Is it the Government's view that there should be more public intervention in the film industry or less?
Thirdly, what action, if any, do the Government intend to take to try to make British film production a profitable enterprise—if that is Government policy—instead of an enterprise which is bolstered up by a series of Eady plans and finance corporations and injections of subsidy from year to year, while the State continues to take a huge levy on the industry in the form of Entertainments Duty and while we continue to resist the very sensible idea of discrimination which some countries have instituted? These countries are getting away with it. We continue to resist what could be a really constructive step in favour of the exhibition and production of British films by giving a rebate on the Entertainments Duly,

I hope that in his reply the Parliamentary Secretary will be able to give an answer on those points, because it would be shameful for this Bill to go through without an elaboration of a more constructive policy on the part of the Government to promote the production of British films.

7.33 p.m.

Mr. Henry Brooke: The hon. Member for Cheetham (Mr. H. Lever) started his speech on Friday by saying that he knew nothing at all about the cinema industry and then spoke for nearly three hours. If I were to make the same admission it would be completely true, but it might fill the House with some alarm and despondency, so I want to make it quite clear that while, like the hon. Member for Cheetham, I am no expert about this industry, I intend to detain the House for only a minute or two.
I am concerned about the Reports which the National Film Finance Corporation submits to my right hon. Friend and which he lays before Parliament. It strikes me as thoroughly justified criticism that a body which is entrusted with very large sums of money, and to which we intend to give some unusual powers under Clause 2, should be prepared to furnish the House with considerably more information than was contained, at any rate, in its last Annual Report.
Let me take, for example, the case of British Lion, of which we have heard so much. In paragraph 13 of the last Report of the Corporation it simply states, about the £3 million loan,
No repayment has, in fact, been made, nor has it been possible for a programme of repayment to be prepared.
That may be perfectly true; I do not doubt that it is, but in most other spheres of activity the House of Commons would demand considerably more explanation than that before it agreed to any talk of writing off £1 million as a loss, or granting these fresh powers in Clause 2 by which some kind of compromise arrangement can be reached if the Corporation is satisfied that the amount of a loan cannot be recovered in accordance with the terms on which it was made.

Mr. Glenvil Hall: To be perfectly fair, if the hon. Member reads the rest of the paragraph he will


find adequate reason why British Lion was not able to make a start in repaying the Joan.

Mr. Brooke: The right hon. Gentleman and I are not in agreement. I have read the rest of the paragraph, which consists of a number of general statements, and I have never known the House of Commons consent to write off £1 million of public money on the basis of some general statements.
I suggest most strongly, and I trust that the Parliamentary Secretary, if he is to reply, will be able to give the assurance, that the Corporation be asked, if it receives these new powers under Clause 2, to furnish a considerably fuller explanation in its Annual Reports as to the use of these powers, as to the efforts it has made and as to the manner in which circumstances proved unfavourable when questions of repayment were being examined.
Let me pass to a later section of the Report, on page 5, where the Corporation is describing the further losses which have been sustained by a number of other producers on films which it has assisted. That takes nobody by surprise; everybody knows the chances of the industry. But here, in the Bill, we are asked to authorise arrangements whereby these loans may be written off or compromised in some way or other, and before we grant those powers I think we are entitled to ask the Corporation to explain rather more fully its policy in making loans. There are jealousies within the industry; there may be misunderstandings; there is a certain amount of public interest and a considerable lack of public information.
Can we be assured that, if the Corporation finds that one particular producer never seems to be able to make a success of anything, it will be extremely chary of lending any further money in that direction? That would be the act of any prudent man, and I have no doubt it is the attitude of the Corporation. But Parliament is entitled to ask the Corporation to specify the principles on which it is proceeding in these matters. It should inform hon. Members that, in the use of the powers they give it, it intends to husband this money with the utmost care, and, in the light of its over-riding duly to keep the British film industry alive, proceeds with no favouritism whatever, is

guided by financial and economic considerations, and is acting throughout as a prudent trustee of public money.

7.39 p.m.

Sir Leslie Plummer: I propose to make my intervention a short one, for I think it is necessary to reduce the average time of speeches as a result of the remarkable performance of my hon. Friend the Member for Cheetham (Mr. H. Lever). I must follow the hon. Member for Hampstead (Mr. H. Brooke) in supporting his plea that the Corporation should be asked to explain more fully its policy in the making of loans. I would ask the Parliamentary Secretary to consider what steps he can take to get the Corporation to explain its policy to him in respect of the documentary films of this country.
The documentary films were the most distinguished films that this country has ever produced. We had a long, important and historical rôleto play in the production and distribution of these pictures. In 1928 or 1929, when Sir Stephen Tallents was at the Empire Marketing Board, and afterwards when he took the film division of that association to the G.P.O. and called it the G.P.O. Film Unit, he took with him the interest of an organisation which succeeded in introducing and distributing into British cinemas and all over the world films that were of extremely high artistic merit, and, at the same time, played a dual rôle in projecting what, for use of a better phrase, I would call the British way of life, to people as no other medium at that time succeeded in doing.
The result of this was that the documentary film productions of this country were regarded as an important contribution to the motion picture industry of the world. Then the war came and despite the fact that the Ministry of Information, when first setup, failed rather badly in the production of its first pictures, the documentary men produced a series of pictures for this country which did an enormous amount to sustain the morale of the people when they were going through an extremely difficult time. As a result of the fact that this nation had accepted the documentary film as a national asset and as a national instrument of policy the industry developed greatly.
I may say that in the travels I made before the war and during the war, and particularly in the United States, I never found that our feature films—and this is one of the claims which I think is made on behalf of the Film Finance Corporation which is not borne out by the fact—were as popular in the United States as some people imagine. In fact, we all know that even today the best feature films produced in this country are very largely shown in the small theatres, known as the art theatres of the United States, for the cinema moguls of that country see to it that our feature films do not appear in the plush and large cinemas of the broadways and main streets of the United States.
But our documentary films, which were cheaper to produce, were, in fact, greatly welcomed and I submit that they could today make as much money for the British film industry by proper distribution to the dollar area as the feature films we are producing. The war ended with the documentary film business of this country established on a considerable scale. After the war, some good pictures were made. Then, with the advent of this Government in 1951, the blow fell on the industry. It was not so much that the Government destroyed the Crown Film Unit but that, at the same time, they destroyed or almost destroyed the whole of the documentary film industry of this country, for this reason.
The previous Government had regarded the documentary film industry as a national asset and an instrument of national policy. In other words, they were using documentary films, and as a result of that they were asking for more films to be produced than the Crown Film Unit could itself produce. So around the Crown Film Unit, ancillary film-producing organisations were set up. When the Crown Film Unit was killed these organisations died, too, because the Government renounced as a method of propaganda the use of documentary films. When they did that the general industry, which had been following the trend of Government publicity and watching the development of the documentary films, decided that it was not interested and the documentary as a method of important commercial propaganda was curtailed. For that reason the industry virtually died.
More serious still, the decision of the Government to wind up the Crown Film Unit, for the quite insignificant saving which resulted, meant that the distributing machinery which the industry had set up throughout the world was destroyed as well. They had built up slowly, painfully and carefully a first-class distributing machine. That is why they were able to get into the theatres of America. That is why they were able to show their films in cinemas almost all over the world. All that has practically gone. All that happens now is that the Central Office of Information produces a trickle of documentary films and for all the use they are to the Government, to the nation and to the film industry they might as well cease. There is no future at all in that scale of production.
I had the honour of showing yesterday in the Grand Committee Room, a documentary film called "World Without End," which was made by the two leading documentary film producers in this country, and in the world—Basil Wright and Paul Rotha. This picture was produced, sponsored and its cost guaranteed by U.N.E.S.C.O. and in so far as we make our contribution towards U.N.E.S.C.O. I am happy to think that this country did pay its share of the guarantee for that picture. When U.N.E.S.C.O. decided that what was necessary was a documentary picture to illustrate the workings of the United Nations' agencies it came automatically to this country to find the men to produce it. It did not go to the United States, to Italy or to France. It came here, to the home of the pioneers of this great intelligent educative movement. They made a picture which is magnificent. It is a superb picture. I know that all my hon. Friends who saw it last night will agree with me. That picture is not to be shown in the cinemas of this country.

Mr. Ellis Smith: Who is stopping it?

Sir L. Plummer: The cinema exhibitors, because they havea rule that if a picture is shown on television they will not show it in the cinemas. The television public is by no means 100 per cent. in this country. The cinemas do reach all our people. Yet the people who are getting money through loans from the National Film Finance Corporation are themselves boycotting the documentary


picture industry in this country, which ought to be supported.
The effect of this on the future will be very disturbing. I do not know how many hon. Members saw, on Sunday night, the nauseating religious picture on television. It was produced to advance the cause of the Lutheran Church. I have no objection to the cause of that Church being advanced, but it is a dreadful thing that, after 20 years of pioneering which we did in connection with the documentary films, the B.B.C. has to sink to the level of producing a bad American film and to put it on television under the title of "Epilogue." It is a disgraceful and corny picture. This had to be shown to the people who had themselves in their midst the men capable of making a truly great documentary film.
The Canadians, Australians and New Zealanders are protecting and helping their own documentary film industry. Through the National Film Board of Canada they are doing a great job in producing documentary films which we are happy to see in this country. It goes without saying that the Iron Curtain countries know the value of this method of production.

Mr. Ellis Smith: We have had enough of them this afternoon.

Sir L. Plummer: The Government made a grievous error in practically knocking out the documentary film industry. The Government have the chance now to consider the error of their ways and to relent their action. They can still do a great deal to revive the industry by seeing that it gets at least its share of the money that is available for the financing of films in this country.
A little more of this intelligent, educative, interesting form of film production going out from these shores would do a great deal more for this country and contribute a greater amount to its future than "Mother Riley Meets the Vampire," or whatever it is called, and the nonsense of many of the feature films which are now attracting the money that they are getting. I hope, therefore, that the Government will consider doing what they can now—it is the eleventh hour, and it is just not too late—to restore for this country the prestige and value of the documentary film industry.

7.52 p.m.

Mr. Glenvil Hall: When the President of the Board of Trade initiated this debate on Friday, he had the temerity to say that the purpose of the Bill was a relatively simple one. As it contains only two operative Clauses, perhaps he thought that it would go through with a minimum of criticism. We have, however, had a debate which, in one direction at least, has been outstanding. My hon. Friend the Member for Cheetham (Mr. H. Lever), in the early sentences of his speech, on Friday, indicated that in view of the nature of the debate he ought to say that he knew nothing whatever about the cinema industry and that the most he could hope to do would be to bring a breath of refreshing ignorance into it.
When we are dealing with a subject of this kind, particularly when firms and individuals are in question, we should be careful that before we speak at large we make sure of the facts.

Mr. H. Lever: Hear, hear.

Mr. Glenvil Hall: I am sorry to say that from my knowledge of the cinema industry, such as it is, many of the things that have been said during this debate have either been misleading or, in some instances, quite definitely erroneous. I must say that I preferred my hon. Friend the Member for Cheetham when he was piloting through the House his Bill on defamation, rather than when he was making his speech in this debate, great though it was as a Parliamentary effort.
After all, this place is a great sounding board. Although legitimate criticism is very desirable, we should be careful that anything we say accords with the facts. I notice that the hon. Member for Cheadle (Mr. Shepherd) is not in his place, but he definitely mentioned certain individuals by name. It ought, therefore, to be said that Sir Alexander Korda is not now an executive producer, whatever he may have been in the early days. For some years now, he has had nothing to do, I understand, with actual production in British Lion. He is only production adviser and has no voting rights whatever in the Corporation. My hon. Friend the Member for Cheetham said tonight that Sir Alexander Korda holds a high and honoured place in the film industry.

Mr. H. Lever: I did not say it, but I gladly agree that it is so. I was speaking of Sir Michael Balcon.

Mr. Glenvil Hall: Well, the same observation applies to Sir Michael Balcon. Although he is the honorary adviser to the National Film Finance Corporation, he does not advise it in any sense or shape on the financial side. He deals, only when his advice is sought, with the cultural and the artistic side. These facts make all the difference when these men and their relationship to the Corporation are considered.
The Bill does two things. It extends the powers, but does not enlarge the financial limits, of the National Film Finance Corporation, and it allows the Corporation to lend for a period of another three years. Secondly—and this is where the main criticism arises—it attempts to close a gap in the earlier legislation and to permit the Corporation to make the best arrangements possible with those concerned where a loan has become irrecoverable.
Why is it essential that the Board of Trade should introduce this Measure now? What is the background for these proposals? First, the Bill continues legislation which was passed by the Labour Government; some of my hon. Friends on the benches behind me are inclined to forget that. It is true that the first Act was passed as a temporary measure for five years only, but as my right hon. Friend the Member for Huyton (Mr. H. Wilson) who introduced the original legislation and has had a great deal to do with this matter throughout, said on Friday and repeated tonight, circumstances have changed and it is now necessary that the powers conferred on the National Film Finance Corporation should be continued.
It may well be that today we may think that certain legislation should be only temporary but that as time goes on experience quite definitely shows that our original conception of the legislation has to be changed. In my view, there is not the slightest doubt that experience shows quite definitely, not only that this legislation should be continued, but that it should presently be made permanent. My hon. Friend the Member for Flint, East (Mrs. White) indicated as much when she spoke last Friday.

The Parliamentary Secretary to the Board of Trade (Mr. Henry Strauss): I may have misheard the right hon. Gentleman, but I think he said that the original intention was for three years.

Mr. Glenvil Hall: Five years.

Mr. Strauss: I am sorry if I misunderstood the right hon. Gentleman. It was for five years.

Mr. Glenvil Hall: My hon. Friend the Member for Cheetham queried the statements that had been made during this debate that in 1948 the film industry was facing collapse.

Mr. H. Lever: I must make it plain that I never queried either that the production industry was then on the point of collapse or that the measures taken by my right hon. Friend the Member for Huyton (Mr. H. Wilson), the then President of the Board of Trade, were entirely justified. I wholly agreed with his taking those measures at the time as a temporary provision.

Mr. Glenvil Hall: I apologise if I misunderstood my hon. Friend. What is quite definitely a fact, and is generally accepted—I am delighted to think that my hon. Friend also accepts it—is that the film industry in 1948 was in great difficulties and something had to be done. It was essential that the Government should come to its assistance. We have to remember that this industry, although not a large one, stands in a very particular and peculiar position in our public life. No Government can afford to ignore that fact.
As I understand them, the critics say that although that may have been true in 1948, the industry by now should have put its house in order, and by now found itself able to raise its own finance. I see that one morning newspaper suggests that the House should reject the Bill so that the industry should be forced to stand on its own feet and find money for its productions.
The short answer to those who say that this Corporation should now be allowed to come to an end is that they are not facing the facts. Neither the Government nor this House can afford to take such a course. As the President of the Board of Trade indicated in his speech on Friday, about two-thirds of British


film production is still financed in part at any rate, by the Corporation. That, I must say, carries very great weight with me.
It follows that if the powers to lend money ended next March quite a substantial halt—as I think the President of the Board of Trade himself said—wouldtake place in British film production. We cannot afford to see that happen. Films, whether they are British or American, have a profound effect on the public mind. Millions go each week to see films, and there is not the slightest doubt that they form a major part of the entertainment of the majority of our people.
It is unthinkable that any Government should contemplate such a halt taking place, because that is what it would mean if the Corporation went out of business. Film production here would also pass into other hands. It is therefore essential on cultural grounds alone that the Corporation should continue because, in that way, we both uphold the British way of life and, most important, ensure that the best quality films continue to be made.
We are already threatened by the Government with American television methods, and it would be tragic if, in addition to that, supposing this Bill were not passed, we should have to rely almost entirely on American films. As several of my hon. Friends have said, although we have to contemplate some losses by the Corporation we have also to remember that every year the nation gets a return in Entertainments Duty of something like £40 million, and, in addition, exports earn us between £2½ million to £3 million. These sums, when placed against the £6 million which the National Film Finance Corporation is allowed to handle through the Board of Trade, give us a better picture than that presented to us tonight and on Friday by my hon. Friend the Member for Cheetham.
There is a misconception in the minds of very many people as to who really is helped by the National Film Finance Corporation. It is quite clear that both Groups 1 and 2, the Rank Organisation and the Associated British Picture Corporation, no longer use the facilities which the Corporation offers. They are fortunate in being able to find such moneys as they require from other sources. That means that if, as we are

told, two-thirds of present production looks to the Corporation for help, the smaller producers must be using the facilities envisaged by this Bill. If the Corporation went out of business, it would mean that only the big organisations would survive.
I remember that when this Bill was first contemplated there was first a discussion on the advisability of setting up a film bank. Later, it was decided that the National Film Finance Corporation should be brought into being. One of the great arguments for setting it up was that it would help the independent producer, the young script writer, director and producer who were unable, because of the stranglehold of the big circuits, to get their films made, or get them screened once they were made. Remembering that one of its functions was to help people of this kind, we can today congratulate ourselves on the fact that obviously they have been helped.
Undoubtedly, Group 3 is doing an excellent job, and I for one should like to congratulate the managing director, Mr. John Baxter, on getting a very good team together and producing some first-class pictures. The Everest film might have passed into other hands if it had not been for the fact that Group 3 exists. That would indeed have been a tragedy.
Most of the arguments in favour of this Bill as well as most of those against it have been put. We have to remember, however, that the whole purpose of setting up the Corporation was to help producers who could not find anyone else to assist them with finance. It was because we knew that film making meant great risks that we had to setup the Corporation. Financial interests in the City, because of the risk and because there were few fat profits to be made, were chary about advancing money and, this being so, it was quite obvious, if the industry was to continue, that the Government must find some other means. I, for one, think that the Corporation has justified its existence up to the hilt, and, as I have already said, I should like to see it continue and, in fact, be made permanent.
We cannot allow Hollywood to monopolise the film industry even if a scheme such as this costs the British taxpayer some money over a period of years. We get it back overwhelmingly in the


prestige of our films abroad, in the fact that our films are able to show the British way of life, and, as has already been said, because some of our films earn dollars abroad.
Hollywood is, at the moment, I believe, extremely anxious to hold its market in this country. It, too, has its difficulties, particularly those connected with television. Our market is very useful to them, I therefore say that we ought to do nothing to cripple the home industry, even temporarily. I can assure the Government that a majority of us on this side of the House support this Measure, and hope it makes a speedy journey to the Statute Book.

8.10 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Henry Strauss): I thank the right hon. Gentleman the Member for Colne Valley (Mr. Glenvil Hall) for his characteristically brief but comprehensive speech which set out admirably our purpose in bringing forward this Bill, a purpose which has, I think, the sympathy and approval of the House with the exception, I at once admit, of the hon. Member for Cheetham (Mr. H. Lever).
In the continuation of his speech, the hon. Gentleman said that in an intervention on Friday I appeared to accuse him of discourtesy. Let me say at once that I thought I was parrying an accusation of the same kind, but supposing I was mistaken in that, I am happy to withdraw any such implication. Greatly though I differ from most of the things which the hon. Gentleman said, I have no differences with him at all as a Parliamentarian.
It may be convenient if I answer some of the points put by various hon. and right hon. Gentlemen in the course of the debate, and sometimes if a point was put by more than one hon. Member, I may answer it in dealing with the speech, of another.
The right hon. Gentleman the Member for Huyton (Mr. H. Wilson) asked me a not unimportant question, namely, whether the two Rank circuits were really being operated as separate circuits. I know he had in mind some negotiations which passed between the right hon. Gentleman himself, when he held the office of President of the Board of Trade,

and the Rank Organisation. As a result of correspondence, that Organisation made it clear that no changes in the booking arrangements designed to increase the effective booking strength of either circuit or to affect adversely the supply of British films to independent exhibitors would result from the arrangements that they were then proposing to make. They were forming a management company to operate both the Odeon and Gaumont circuits.
It was after he had received those assurances that the right hon. Gentleman said that he would not use certain powers which he had under Section 5 (5) of the Cinematograph Films Act, 1948, to oppose the centralised management scheme. He has now asked me whether they are being operated as separate circuits. I think the right hon. Gentleman will agree that, if those undertakings had been disregarded, we should have expected to receive complaints either from the Cinematograph Exhibitors' Association or from the British Film Producers' Association. I am glad to inform him that we have received no representations to the effect that the undertakings he then received have not been observed.
I would also say, in reply to a point made by the right hon. Gentleman himself or by another hon. Member, that no independent producer has applied since 1951 for a direction under Section 5 (2) of the 1948 Act, under which the Board of Trade could in certain circumstances have directed one or other of the circuits to show films.

Mr. H. Wilson: I am sorry to interrupt the hon. and learned Gentleman, but the evidence he has just given in reply to my query about the two Rank circuits is very sketchy. All he has said is that there is no reason to think that there is any change in those arrangements because there has been no complaint either from the exhibitors or the producers. Has not the hon. and learned Gentleman or his right hon. Friend been in contact with the Rank Organisation on this point? Have they asked whether the arrangements are still the same as they were at that time? Has the hon. and learned Gentleman, for instance, ascertained the view of the National Film Finance Corporation? Are they entirely happy about it? Surely the hon. and learned


Gentleman should make more thorough inquiries and not merely say that as far as he knows he has received no complaint?

Mr. Strauss: I thought I was answering the point fairly fully. Of course, I did not mean to say that I was relying wholly on that. I am sure that our relations with the National Film Finance Corporation are sufficiently intimate to ensure that, if the Corporation shared that fear, they would have informed us. I will not say that we have made a specific inquiry of the Rank Organisation between the time the right hon. Gentleman made his speech and today, but I am confident that, if the state of affairs I have described did not exist, there would have been complaints.
My hon. Friend the Member for Ealing, South (Mr. Maude) was anxious lest, as a possible result of Clause 2 of this Bill, the National Film Finance Corporation might get the majority shareholding in a company. Certainly there is nothing in the Bill which makes that an impossibility. Certainly it is not the desire either of the Corporation or of the Government that this should be necessary, but it would be wrong to put a limitation in the Bill which would prevent the best arrangement being made in any particular case so that as much as possible of any loan could be recovered.
My hon. Friend the Member for Cheadle (Mr. Shepherd) made certain suggestions about reorganisation of the management of the British Lion Film Corporation. It would be wrong for the Government to set up a body like the National Film Finance Corporation, which can consider with more expert eyes the professional abilities of those to whom they advance money, and then for us to intervene directly. At the time of the original loans to the British Lion Film Corporation, the National Film Finance Corporation insisted on certain conditions which have been substantially observed. Therefore, for the reason given by the right hon. Gentleman the Member for Colne Valley and myself, I do not think it would be appropriate for me to go into any personalities in this connection. I would add a correction already made by the right hon. Gentleman, in order to make it quite clear, that Sir Alexander Korda is not a director of the British Lion Film Corporation. He has advised them

on some of the films which the Corporation has helped to finance, but I should say that the record of "The Third Man," "The Fallen Idol" and "The Sound Barrier" is not perhaps too bad.

Mr. M. Follick: Very good.

Mr. Strauss: Therefore, if I do not go into any further details, I hope it will not be assumed that Her Majesty's Government are agreeing with any of the criticisms that have been made.
The hon. Lady the Member for Flint, East (Mrs. White) asked whether Sir Alexander Korda had applied to the Corporation for a loan in order to make a series of commercial television films. Here again, I should like to make it clear that the Board of Trade do not know normally who have applied to the Corporation for loans. Nor do we intervene one way or the other to encourage the Corporation to make loans in particular cases or to discourage them from making loans in others. I have ascertained by inquiry, however, that no proposal of the kind referred to by the hon. Lady has been received from Sir Alexander Korda.
On the general question of whether any advance could be made for a television film, there is nothing in the principal Act to prevent it. The Corporation financed two such propositions in the very early days, but since then no proposals made for this purpose have seemed to qualify for loans from the Corporation.
My hon. Friend the Member for Devizes (Mr. Hollis) asked whether the Secretary of State for the Colonies had not been right in some of the things he said at the time the Corporation was formed. The answer is, "Yes"; my right hon. Friend has proved in certain respects to have had more foresight than some other people. But in answer to the specific and relevant point put by my hon. Friend, it is the view of all who have studied the question that, whatever might be the Chancellor's policy on Entertainments Duty, which it would clearly be impossible for me to discuss, legislation of the type already on the Statute Book, which we are amending by this Bill, would still be required to provide working capital for British film production.
My hon. Friend the Member for Devizes also said that perhaps too much


credit has been given to the Corporation for certain things which have happened simply when the Corporation have been there. He mentioned, in particular, the reduction in costs. I am happy to inform him that the National Film Finance Corporation agrees with that and has no desire whatsoever to be considered the sole cause of the improvement which has taken place. However, I agree with the right hon. Gentleman the Member for Huyton that it has certainly played its part.
The hon. Member for Aston (Mr. Wyatt), the hon. Member for Cheetham and other hon. Members have raised questions about the position of Sir Michael Balcon. I want to say at once that, as the right hon. Gentleman the Member for Colne Valley pointed out, Sir Michael does not advise on the granting of loans; he advises on technical matters. I know that may not completely meet the point which the hon. Member for Cheetham has in mind, but I want that to be clear at the outset.
In all seriousness, if the Corporation is to have first-rate advice on highly technical matters, it must have that advice from someone engaged in the industry. Otherwise the advice will simply not be obtainable. The hon. Member for Cheetham and others are entitled to demand that, if this happens, there shall be no concealment of it and it shall be openly stated. That is precisely what happened before the first loan was made.
In fairness to Sir Michael Balcon, I want to read paragraph 13 of the1952 Annual Report, which said:
Amongst the borrowers Ealing Studios Ltd. appears for the first time this year. Because of Sir Michael Balcon's dual position as a director of that company and as honorary adviser to the Corporation, this loan, unlike all others, was specifically referred to, and approved by, the Board of Trade. The Corporation thought it right to secure official confirmation of its own strong view that this loan need not affect in any way Sir Michael's position as adviser. The services he renders are far too valuable to be unnecessarily sacrificed.
The hon. Member for Cheetham may not be satisfied with that, but I am sure he will say that, as that is expressly stated in the Report, it completely exonerates Sir Michael Balcon. My right hon. Friend is perfectly prepared to accept full responsibility for that decision, and I believe that

the decision is one which the House as a whole approves.
Perhaps it would be convenient for me now to deal with what I believe to be the chief point made by the hon. Member for Cheetham in his not inconsiderable speech. He used some very strong language about Clause 2, and said, in effect, "Can you imagine any prudent lender acting as is suggested in Clause 2 (1)?"He ridiculed the idea that a prudent lender would do anything of the kind. But I must point out to him and to the House that this is a power which any ordinary lender would have without statute. The only reason we need put it in the Measure is that the National Film Finance Corporation is a statutory Corporation. I am certain that in his professional practice the hon. Member would not tell a lender that it should always be his policy to wind up a company which owed him money and not to adopt any alternative remedy. That would be fantastic.

Mr. H. Lever: rose—

Mr. Strauss: Although I cannot rival the hon. Member in loquacity, I am entitled to make my point. He has not a monopoly of the time of the House. No ordinary lender would require legislation to give him this power. The hon. Member was wrong in suggesting that this gave notice in advance to any borrower that he had only to say that he wanted to produce some more films and then, however solvent he might be, he could look forward, with this Measure on the Statute Book, to being excused his debt. That is the most preposterous nonsense.

Mr. Lever: The hon. and learned Gentleman is completely avoiding answering the point I made. The President of the Board of Trade said it was the action of a normal prudent creditor to abate his debt in the manner provided here, not on grounds of inability to pay but on the grounds that the production of films would be harmfully affected. In other words I said no ordinary creditor would abate his debt except on the ground of inability to pay; he would not abate it because the debtor's productive capacity would thereby be harmed.

Mr. Strauss: Perhaps, if the hon. Member had made his point a little more


briefly, I should have got it better, but I think I have got it substantially correctly. The hon. Gentleman completely misunderstood my right hon. Friend. What my right hon. Friend said, and what the right hon. Gentleman opposite agrees with, is that, when this Corporation has a debt outstanding, it should not have as its sole remedy winding up the borrower.

Mr. Lever: That is not what the Clause says.

Mr. Strauss: I must disagree with the hon. Gentleman. We can say, on looking at this Clause, that one can imagine it being operated by lunatics to produce lunatic results, but there are very few Measures about which that could not be said. When we look at what is actually in the Clause and what are the safeguards, I suggest that the purpose of the Clause is perfectly proper. It is that there should be in the hands of the National Film Finance Corporation some alternative method of recovering a debt without liquidating the borrowing company, which, incidentally, would not enable it to recover the whole of its debt.
The hon. Member asked me certain other questions. I do not know if I have got them all, but I will try to answer some of them. One of these questions was: Is this three-year extension of the borrowing powers intended to be final? I commend this Bill as right today, and I advise the House to give it a Second Reading, because I say that it is right to extend these powers for three years, but the hon. Gentleman knows as well as anybody else that that would not be binding on any future Parliament, or even on this Parliament should it think differently on another occasion. I hope that we shall be realists and see how this thing works out.
Then the hon. Gentleman asked whether the Finance Corporation had statutory powers to lend money otherwise than in the bona fide expectation of fully recovering it. I must ask him to look at the principal Act, and, if he will do so, he will see that Section 1 (1, b) lays down what its purpose is. Leaving out unessential words, it lays down that they shall make—
…loans to be employed in financing the production or distribution of cinematograph films to persons who, in the judgment of the

Corporation, while having reasonable expectations of being able to arrange for the production or distribution of cinematograph films on a commercially successful basis, are not for the time being in a position otherwise to obtain adequate financial facilities for the purpose on reasonable terms from an appropriate source.
In answering that question, I am not going to try to improve on the language of the Act, which governs this matter. I could refer the hon. Gentleman to many other Sections of the Act, and particularly Section 2.

Mr. Swingler: The language of the Act, as the hon. Gentleman has now given it to us, is in striking contradiction to the practice of the Corporation, because it suggests that the money is to go to people who have some prospect of producing films that will be commercially successful. The Corporation has proved that it knows it is lending money to people whom it knows cannot possibly be commercially successful, and there is a very serious contradiction between the practice of the Corporation and the language of the Act, which gives rise to some of these questions, which I think the hon. Gentleman should answer.

Mr. Strauss: I think the industry is such that it is easier to be long-sighted over a series of films than over an individual film, but, unless the Corporation had made a real effort to pay attention to the language of the Act, it would certainly have lost very much more money than it has done. The greater part of its loss was on this single loan to the British Lion Film Corporation.

Mr. H. Lever: Is the hon. and learned Gentleman going to answer my question? I have asked him whether the Corporation has the power to make loans otherwise than bona fide expecting to get them back? Is that legal or not legal? The answer is just "Yes" or "No," and not the recital of all these things.

Mr. Strauss: The hon. Gentleman is once again objecting, after his own unexampled garrulity, to a Minister replying in his own way. He has asked me to define what the Corporation can do, and I say that that is laid down in an Act of Parliament to which the hon. Gentleman did not think fit to refer. I am not going to endeavour to improve upon the language of an Act of Parliament, which is part of the statute law


of this country. The hon. Gentleman then asked me a question. [Interruption.] If the hon. Gentleman asks "Are they acting lawfully or unlawfully?" I say that if we thought they were acting unlawfully we should of course take the necessary steps to stop them.
I think the hon. Member for New-castle-under-Lyme (Mr. Swingler) and other hon. Gentlemen made a mistake when they talked about the Corporation losing when a film made no money and not sharing the profit if it succeeded. If the hon. Gentleman will turn to the original Act, and indeed to the practice of the Corporation as revealed in the Annual Reports, he will know that in making a loan they frequently make it a term of that loan that they shall share in the profits. In fact, in one of the Annual Reports they devoted some paragraphs to answering the allegation that they were taking too great a share of the profits.
My hon. Friend the Member for Hampstead (Mr. H. Brooke) had, I think, more quarrel with what he thought the inadequacy of what the Corporation states in the Report than with anything it was either doing or not doing. I do not believe he would have much quarrel with that comment. He said that the Corporation might have made it clearer in its Annual Report just what it was doing, and hoped that in future Annual Reports it will tell us more. I am sure that is a point which it will consider. It is a little difficult to judge just how much to say in an Annual Report without wearying the reader who wishes to get the essential facts and I do not think its task was easy. One has to take a fair view. When its last Report was debated in another place, Members of all parties paid tribute to its clarity. That is said without prejudice to what my hon. Friend has said, which I am certain will be brought to the notice of the Corporation and will be considered by it.
The hon. Member for Deptford (Sir L. Plummer) dealt with a matter which Mr. Speaker last year held to be out of order and which had really nothing to do with the subject either of the principal Act or of any amendment of it, namely, the Crown Film Unit. Whatever the merits of that controversy they do not arise to-

day, and all I would say to the hon. Member for Deptford is that many of us on both sides of the House share his admiration for English documentary films. I would make it quite clear that there is nothing to prevent the producer of a documentary film from applying to the Corporation for a loan. Indeed, one very eminent documentary film is the Everest film on which the Corporation advanced the whole of the money. I think it is worth observing that there is no reason at all why these films which enjoy the admiration of both sides of the House should not receive help from this Corporation.
The right hon. Member for Colne Valley who wound up for the Opposition, quite accurately stated the two things which this Bill accomplishes. It extends the borrowing powers for three years; it does not, as has been said quite inaccurately by a number of hon. Members, throw a lot of new money down the drain. It does nothing of the sort. The amount that they are entitled to borrow is in no way affected by this amending Bill. The period during which they lend is extended, and that, as I know, has the approval of all sections of the House.
The second object is to enable the best arrangements to be made with a company which it is not advisable to wind up, but which owes the National Film Finance Corporation substantial sums. Let me make one thing clear, which I do not think is clear to the sole opponent of this Bill. The only way in which any public money could be lost would be under the operation of Subsection (2) of Clause 2. The hon. Member for Cheetham assumes that if there were any action under Subsection (1), that must almost automatically result in a remission under Subsection (2).
Action might be taken under Subsection (1) which would have no consequence under Subsection (2). It is only right, I think, that under Subsection (1) the Board of Trade, as the Department of State directly concerned with the National Film Finance Corporation, should be the Department to give approval. But it is also quite clear that before any public money is written off under Subsection (2), such writing off should have Treasury approval. Those are the grounds for the way in which the Clause is drafted.
I think I have answered the various points raised, and I commend the Bill to the House.

Question put, and agreed to.

Bill accordingly read a Second time.

Committed to a Committee of the whole House.—[Mr. Legh.]

Committee Tomorrow.

Orders of the Day — CINEMATOGRAPH FILM PRODUCTION (SPECIAL LOANS) [MONEY]

Considered in Committee under Standing Order No. 84 (Money Committees).—[Queen's Recommendation signified.]

[MR. HOPKIN MORRIS IN THE CHAIR]

Resolved:
That, for the purposes of any Act of the present Session to extend the period during which loans and advances may be made under the Cinematograph Film Production (Special Loans) Acts, 1949 to 1952, to authorise the National Film Finance Corporation to enter into special arrangements with respect to certain loans, and for purposes connected therewith, it is expedient to authorise—
(a) any increase attributable to the pro visions of the said Act of the present Session extending the said period from five years to eight years in the sums which under or by virtue of the said Act of 1949 are to be or may be issued out of the Consolidated Fund, paid out of moneys provided by Parliament, raised by borrowing, remitted or paid into the Exchequer;
(b) the remission in whole or in part, where any such arrangements have been entered into with respect to a loan, of payments by the said Corporation to the Board of Trade, being payments of amounts in or towards repayment of any advance made by the Board under section four of the said Act of 1949 and used for the purposes of that loan or payments of interest on any sums for the time being outstanding in respect of any such advance.—[Mr. H. Strauss.]
Resolution to be reported Tomorrow.

Orders of the Day — INDUSTRIAL DISEASES (BENEFIT) [MONEY]

Resolution reported,
That, for the purposes of any Act of the present Session to amend the Pneumoconiosis and Byssinosis Benefit Act, 1951, by applying it to diseases in respect of which compensation was payable under the Workmen's Compensation Act, 1925, and by making provision for the payment of benefit for partial disablement, and for purposes incidental thereto, it is expedient to authorise the payment out of

moneys provided by Parliament of any increase in the expenses of the Minister of Pensions and National Insurance or any other Government department which are so payable under section sixty of the National Insurance (Industrial Injuries) Act, 1946, as applied by virtue of subsection (1) of section four of the said Act of 1951.
Resolution agreed to.

Orders of the Day — POST-WAR CREDITS

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Legh.]

8.45 p.m.

Mr. M. Follick: This question I am raising tonight is very complicated, and I beg a little indulgence from the Chair, because I know that we must not bring the question of legislation into an Adjournment speech. This vexed question of post-war credits is a matter that should have been readjusted years ago. I am not putting on the Conservatives the entire blame for not having already introduced legislation to alter the present system of paying out these post-war credits. I think that we ought to have done it ourselves, when in power.

Mr. Deputy-Speaker (Mr. Hopkin Morris): The hon. Member, himself, began by referring to the right rule. I think he must observe it.

Mr. Follick: I am most profoundly sorry, but I did give a little warning that such might happen in the course of my speech, and I craved your indulgence, Sir.
I am sure that there is, throughout the country, great resentment at the fraudulent way in which post-war credits are being administered.

Lieut.-Colonel Marcus Lipton: They are not being administered.

Mr. Follick: I think it is a frightful shame, and a slur on the workings of this House, that people who are desperately in need of the money that rightly belongs to them should not be considered, while other people who have no need of this supplementary money should have it almost forced upon them. It is laid down: in the law that a man has to attain the age of 65 years, and a woman 60 years, before getting the benefit of repayment of post-war credits.

Lieut.-Colonel Lipton: The hon. Member talks about a "benefit." It is not a benefit. It is an entitlement, and that, I think, is the better word to use.

Mr. Follick: It might be a better word legally, but the person who gets that money gets the benefit of it. What I am protesting against is their not getting the benefit of it, although they are entitled to it.
When I reached the age of 65 I was paid my post-war credits without any trouble and without the slightest questioning. I did not need them. When I got them, what did I do? I paid them back—I put them in the bank, which is the same thing as paying them back.

Lieut.-Colonel Lipton: Not quite.

Mr. Follick: I understand that the maximum that any individual can receive by way of post-war credits is about £300.

Mr. Douglas Houghton: It is £325.

Mr. Follick: To one person £300 may be very little, yet to another person £10 or £15 or £20 may mean all the difference between ending his life in a decent way or in a poverty-stricken way. The Tories feel quite as strongly about these post-war credits as we do on these benches. I remember the trouble there was at Margate about them, when harsher words were used than I am using this evening.
As a Member of Parliament, I have received appealing letters, as have hon. Members opposite. I remember one that I had from a person dying of cancer, who had a very few months to live. We on these benches were in power then. I wrote to the Treasury, but they could do nothing about it because of the law, and the money could not be paid. Just think of the difference in comfort that £10, £20 or £30 might have made for that person in the last months of his life. After all, the money belonged to him. But nothing could be done for this man. I afterwards received a letter from the family saying that he had died in a miserable way.
There are other cases of people who are in desperate need. I remember one case of a man who was brought up before the magistrate and had the option of going to prison or paying a fine. He came to me and asked if he could have

his post-war credits with which to pay the fine.

Mr. Houghton: Is my hon. Friend suggesting that post-war credits should be used to subsidise sin?

Mr. Deputy-Speaker: I am not quite certain what the hon. Member's argument is directed to. Is he directing his argument to the suggestion that in certain specific cases post-war credits should be paid, or that the total amount should be paid? I understand that the position is this. Specific classes cannot be paid without legislation, but the total sum can be dealt with administratively. That being the case, the hon. Gentleman cannot on the Adjournment argue for the payment of post-war credits to specific classes.

The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): It may be of assistance to you, Mr. Deputy-Speaker, if I indicate that the only step possible in this direction without legislation is what you have indicated—a complete payment of all outstanding credits, which can be effected under the original legislation by Treasury order. Any other payment on a selective basis would require legislation.

Mr. Deputy-Speaker: In that case, the hon. Member must direct his argument on the Adjournment to the total sum.

Lieut.-Colonel Lipton: Pay the lot.

Mr. Follick: If that is the only manner in which I can make this protest, then I must obey the Chair, and say that it is the total sum with which I am concerned. The total sum after the war was, in round figures, £800 million out of which, roughly speaking, £185 million has been repaid. The total amount paid back up to 1953, including the years during the war, has been £214 million. That leaves nearly £600 million—

Mr. Houghton: It leaves £572 million.

Mr. Follick: I said "nearly"—to pay back. These repayments have been gradually falling off each year. I shall not take the first two years—1946–47 and 1947–48—because they included previous years. In 1948–49 the repayments amounted to £19 million; in 1949–50, to £17 million; in 1950–51, to £169 million; in 1951–52, to £16·2 million, and in


1952–53, to £16 million. There has been a gradual fall yearly, from £19 million to £16 million.
I contend that in considering these repayments we should not take too much notice of a fixed limit of 65 years of age. We should be more inclined to take notice of need. How are we to do so?

Mr. Deputy-Speaker: Order. The hon. Member is now referring to a specific class of people, and that would require legislation. He can deal with the total amount, but no other.

Mr. Follick: I am now speaking about the repayment of the total amount. I am not speaking of the repayments in any one year.

Mr. Deputy-Speaker: The question of specific need would not then arise.

Lieut.-Colonel Lipton: We are all in need.

Mr. Follick: We are all agreed—

Lieut.-Colonel Lipton: I said, "We are all in need."

Mr. Follick: —that something should be done on those lines to help the needy—even if it means paying back the whole amount—and not to help the people who are not in need. We have the National Assistance Board, which could tell us whether or not people are in need, so that we could make full use of legislation, and find legislative means by which this can be carried out.

Mr. Deputy-Speaker: Order. The hon. Member is again advocating legislation. He must keep off any argument which involves legislation.

Mr. Follick: I am suggesting legislation which already exists. Hon. Members on both sides of the House have told me that they would like to intervene in this debate. We all have the feeling that something is wrong in withholding this sum, even the complete sum, not to speak of smaller amounts—because I must not speak of them.
I should like to read two or three lines from a leading article in a newspaper today, mentioning a speech of the Chancellor of the Exchequer, and his representative here will understand that what the Chancellor has said must be true.

Hon. Members: No.

Lieut.-Colonel Lipton: My hon. Friend has now destroyed his case.

Mr. Follick: I am not referring to what we think, but what the Financial Secretary thinks. The leading article says:
There remain to add a level of production now higher than at any time since the war, the substantial recovery of our gold and dollar reserves, the improvement in the balance of payments…
That has all happened in the last year. If we are so well off and solvent, surely we can at least think of those poor people who are not only not solvent but are desperately in need of some help.

9.0 p.m.

Mr. Douglas Houghton: I hope that my language in dealing with this matter will be a little more temperate than that of my hon. Friend the Member for Loughborough (Mr. Follick). I hope, also, that I can keep within the rules of order on a matter which, from experience, we know is a very troublesome one to deal with on the Adjournment.
I am sure that the House will realise how the original conception of post-war credits has painfully misfired in the years since the war. It was, we believe, the conception of the late Lord Keynes, who was advising the Government on economic matters during the war. There is an interesting account of what was in the mind of Lord Keynes in Mr. Roy Harrod's biography of him, and with the permission of the House I should like to read an extract from Mr. Harrod's biography of the late Lord Keynes. It says:
Reflecting upon the normal course of inflation it occurred to him that what really happened was that the capitalist class enriched itself by the rise of prices and emerged from the war better off by the amount of the increase in the National Debt to which they were enabled by the inflation to subscribe.
His plan of compulsory saving would secure that a substantial part of the deficit was financed not by inflation borrowing but a levy upon wage packets in return for an undertaking to pay later. Thus, it would be the wage earners and not the profit takers who would emerge from the war as the main holders, in the form of deferred pay claims, of the newly created National Debt.
It is true that these proposals did create a much larger credit for the great mass of the wage earners of the day than they


did for the rentier class or the well-to-do. As my hon. Friend the Member for Loughborough said, the maximum holding of post-war credits is about £300. I ought, I suppose, to declare an interest, because my holding is the maximum of £325, and if the existing rules continue it will be 10 years before I am paid out. The system adopted of repaying post-war credits has been by reference to the attainment of a certain age.
This is at variance with a promise made by the then Chancellor of the Exchequer when he introduced post-war credits for the first time in his Budget Speech of 7th April, 1941. The late Sir Kingsley Wood said:
I am proposing, therefore, that the extra tax which any individual will pay by reason of the reduction in the personal allowances and earned income allowance will be offset after the war by a credit which will then be given"—
which will then be given—
in his favour in the Post Office Savings Bank."—[OFFICIAL REPORT, 7th April, 1941; Vol. 370, c. 1329.]
That was the promise made at the time the post-war credits were introduced, and which were accompanied by a very severe increase in direct taxation; but for reasons which have been fully explained to this House by successive Chancellors of the Exchequer, partly the desire to avoid stimulating the inflationary movement, partly on account of the difficulty of raising in addition taxation or in borrowing any additional resources to repay such a huge amount, they could not do more than is being done now.
A number of suggestions have been made for accelerating the repayment and for extending the conditions upon which repayment may be made, such ideas as a progressive reduction in the age at which repayment should be made or payment to widows and next-of-kin or payment in cases of long illness.

Mr. Deputy-Speaker: All these suggestions, surely, would require legislation.

Mr. Houghton: I was about to say not only that I reject these on their merits, but that they would be out of order in this debate, Mr. Deputy-Speaker. I am not suggesting any of these things; I am, in fact, saying that each one of them, apart from requiring legislation, has inherent defects, anomalies and injustices,

quite apart from the difficulties of administration which perhaps I should not mention because, in my trade union capacity, I represent the people who have to repay the post-war credits, whether on a large scale or on a small scale.
I suggest that there is only one satisfactory thing to do about post-war credits—not to repay them all but to credit the credits into an account in the Post Office savings bank, as the author of post-war credits said would be done, or into savings certificates, at the option of the holder. I believe that, otherwise, the Chancellor of the Exchequer will be under constant pressure and that the farce of post-war credits will be more strongly criticised as the years go by.
Already, post-war credits have gone into the currency of music hall jokes. They are not treated seriously on the music hall stage, but they are treated very seriously on the platform and in the body of the halls of the Conservative Party conference, and not all the blandishments, persuasive eloquence and grasp of the case which we know the Financial Secretary to have succeeded in stemming the tide of criticism and resentment at his own party conference.
It may be argued that if a forced loan, which post-war credits were, is converted into a voluntary loan, the withdrawals might be on such a scale as to weaken the financial stability of the country, so that the Chancellor of the Exchequer would have to cover the withdrawals either by additional taxation or by additional borrowing. I think that in taking this bold step of converting a compulsory loan into an ordinary voluntary loan the Chancellor would have to impress upon people that if they rushed for repayment serious measures would have to be taken to offset the financial consequences. I believe that the public would respond.
Those who had money to lend, the better-off people, who had money in their pockets or in their banks, or were making profits out of the war—those who could lend voluntarily—have the right to withdraw the full amount, whatever it is, which they lent to the Government in the war. They can leave it to whom they like. They can even leave it to charity. But if we leave our post-war credits to charity, there is no provision, at the moment, for them ever to be repaid


The people who were not among this more fortunate class—the war workers, the wage earners—who were asked to give the maximum production, were asked at the same time to make the maximum financial sacrifice by deduction of Income Tax from their wages; and they are not allowed freedom of use of their money, whereas everybody else is.
Let me say, in passing, that there is nothing more salutary than taking tax out of a wage packet. It does not matter whether there is distress at home, it does not matter whether there is illness or domestic hardship, it does not matter whether one is passing through some temporary or even permanent financial crisis—that money is taken out of the wage packet whether one likes it or not.
The great mass of the well-to-do taxpayers are not in that unfortunate position. They pay under Schedule D, and anyone who pays tax under Schedule D knows that he can have, if he wants it, or if he takes it, considerable time in which to pay. Therefore, those who have the biggest stake in post-war credits today are those who suffered a compulsory loan by deduction from their wage packets.
I believe that this is the only way to end the present unsatisfactory position of post-war credits. Do anything else—reduce the age limit progressively, try to meet hard cases—and administrative difficulties immediately arise. Are we to have a tribunal to decide the degree of hardship upon which post-war credits are to be repaid? Are we to trouble the whole community by asking people to produce their birth certificates before they can get repayment? We can at least say at present that when post-war credits are paid out at the retirement ages there is automatic proof of age in 90 per cent. of the cases, because at that time proof of age has to be given to the Ministry of National Insurance, and Government Departments, being what they are, exchange information.
Any age much lower than retirement age would require independent and separate proof of age. I hope, therefore, that the Financial Secretary will be able this time to do a little more than just stonewall on this issue. I had the privilege to take part in an earlier debate on this subject on the Adjournment, instigated by my hon. Friend the Member for Southampton, Itchen (Mr. Morley);

but we got nowhere. I know that Adjournment debates are perhaps not the occasions for statements of major policy on the part of Her Majesty's Government, and we can only say this: if the Financial Secretary cannot do better this time than he did last time we shall be bound to leave him to the mercies of the Conservative Party conference.

9.13 p.m.

Sir Edward Boyle: I was interested to hear the hon. Member for Sowerby (Mr. Houghton) saying what a good thing it was to cease taxing wage packets and I hope he will remember, when addressing his constituents in Sowerby that the present Government have reduced the taxation of some 14 million wage packets. I will come in a moment to the suggestion of turning forced loans into voluntary loans and also to the Margate conference.
I think that it is only right when we are considering this question that we should first take into account the very difficult position which each Government has faced since the war over post-war credits. The hon. Member for Sowerby very rightly quoted from Mr. Harrod's "Life of Keynes." I suspect that there were other points in Keynes' mind. I think that one of the assumptions upon which a great deal of his war-time advice was based was that, after the war, in one or two years we might get back to unemployment, and that it would be very useful for whatever Government was in power to keep this spending money in reserve.
I think that one thing which vitiated Lord Keynes' economic thinking in his later years was his failure to realise that the balance of payments difficulties would constitute our prime economic problem after the war. We have had no employment difficulties since the war. I do not want to make a party point of this, but no less a Socialist than G. D. H. Cole once said that the party opposite never had to take steps to increase employment when the Socialist Party were in office.
The principal problem since the war has been our balance of payments problem and, therefore, the whole trend of our economic policy has had to be very different from that which Lord Keynes conceived in the 1940s, when we were still at war. The post-war credits have left


each Government with a very difficult situation.
The hon. Member for Loughborough (Mr. Follick) mentioned that the Chancellor of the Exchequer was always right. I have the greatest respect for the judgment of my right hon. Friend. I think he has the gift of accurate forecasting, and of being right very much more often than most people. But if, next year, he were to repay £572 million of post-war credits, my judgment in him would be a little bit shaken; and I am not happy even about the suggestion of turning a forced loan into a voluntary loan.
I do not want to go into detail about the present economic position, but I do not think that many people would dispute that the present level of consumption at home is just about as high as the country could afford—some would say that it is rather higher than we can afford. I do not think many would dispute that we could hardly afford to take steps which would very much step up the level of consumption at home. Certainly, if £572 million worth of post-war credits were to be repaid in the next Budget that would certainly step up consumption at home quite considerably.

Mr. Follick: Would the hon. Member concede that I mentioned £572 million only to be in order? What I suggested was that the needy should be paid, but that was out of order.

Sir E. Boyle: There were moments in the hon. Member's speech when I was rather reminded of the famous sentence in "Alice in Wonderland":
Everybody has won, and everybody shall have prizes.
The hon. Member wanted to indicate that he wished certain specific classes of people to win, but he could only keep himself in order by saying that everybody should win.
To return to the question of a voluntary loan, I am not quite as optimistic as the hon. Member that an appeal from the Chancellor of the Exchequer would have the effect that he would like. I am not trying to make a party point, but am looking at the thing realistically. Since the war there has been a steep rise in prices, and especially in the period after the opening of the war in Korea, not so very long ago. People simply do

not have the confidence that if they leave their savings in the Post Office, those savings, in a few years' time, will be worth anything like as much as they are worth today. One of the penalties we have to pay for the steady fall in the value of the £ since the war is that people would not be so ready to respond to an appeal of that kind.

Mr. Houghton: Surely the hon. Member knows that not only are millions of people leaving their money in the Post Office, but that millions of people are still putting their money into it.

Sir E. Boyle: I quite agree. Nevertheless, I still think that if we were to do as the hon. Member suggests and try to turn this forced loan into a voluntary loan, people's fears as to the value of money in the future would be a factor which militated against its success. Much as I respect the persuasive powers both of my right hon. Friend the Chancellor of the Exchequer and of my hon. Friend the Financial Secretary, I think that that would be taking too big a risk.
I am not making the mistake of asking my hon. Friend to anticipate his right hon. Friend's Budget statement, but it seems fairly clear that in the next Budget we must think a great deal about investment, both at home and abroad. It is unrealistic to expect my right hon. Friend to take any steps which would result in a large increase in consumption.
Just a word about Margate. The discussion at Margate was a very good one. I was one of the scrutineers in the count afterwards, and a very exciting job it was. My hon. Friend made a speech as persuasive as any he has made on the Finance Bill in the House. When I heard him trying to persuade his friends at Margate about post-war credits, I thought he was putting up the sort of performance that he used to put up two years ago when he tried to persuade my hon. Friend the Member for Oldham, East (Mr. Horobin) that the Excess Profits Levy was not quite such a bad thing after all. Even though, despite his efforts, my hon. Friend was not successful at Margate, the fact that the majority was a very narrow one was a tribute to his talents.

Mr. Emrys Hughes: The hon. Member said that he took an intimate part in the ballot at the conference. Can he explain why it was a ballot vote?

Sir E. Boyle: That is not something of which the House normally takes cognizance. It is not too easy to count hands with two halls involved at the same time. There is nothing sinister about that.
I want to end on this note. We are in a difficult position today. On the one hand, post-war credits are an obligation which has to be met. The "Economist" made a useful point in an article a week or two ago when it pointed out that unless this post-war credits obligation is met we shall never be able to use a method of this kind again.
On the other hand, it is unrealistic not to take into account the economic position of the country today. I do not think that many people would dispute that in our financial policy for the immediate future we must be thinking of industry rather than of increasing consumption. It is because I am afraid that the proposals suggested by the hon. Member for Sowerby would lead to a fairly big increase in consumption that I cannot agree with him, given the economic circumstances of the country as they are at present.

9.21 p.m.

Mr. Norman Smith: I find myself in the very difficult position of agreeing with much that the hon. Member for Handsworth (Sir E. Boyle) said, though I cannot let him get away with the idea that a balance of payments difficulty is a post-war phenomenon. It is nothing of the sort. In the three years before 1939 this country had a substantial balance of payments deficit on overseas accounts. The then Tory Government did nothing about it, because in those days we were able to run down the overseas investments accumulated by our Victorian forefathers.
I agree with the hon. Member for Handsworth on two major counts, much as I dislike doing so. My hon. Friend the Member for Loughborough (Mr. Follick), who has performed a public service by raising this matter, relied mainly on humane considerations. That, however, is not much good, for we cannot make that a major factor in a discussion of this subject. I agree with the hon. Member for Handsworth that to pay out all this money at once might lead to difficulty, and, therefore, I will give the Financial Secretary an idea of how to do it and he

will be very grateful to me for the suggestion. It is a much better system than that suggested by my hon. Friend the Member for Sowerby (Mr. Houghton), because if this money were straight away paid out in cash unequivocally, there would be inflation.
If we did what my hon. Friend the Member for Sowerby suggested, there would still be inflation, because all sorts of people would cash these credits. I want the Financial Secretary to give very serious consideration to my suggestion about this, because there is no reason why he should not do what my hon. Friend the Member for Loughborough wants him to do. The existence of these post-war credits has the effect of making the working-class wage earner entirely sceptical about the whole business of savings, and I feel that we have got to have a serious saving campaign in the years immediately ahead.
I agree with the hon. Member for Handsworth that we have to restrict consumption at home, or at any rate we have toprevent it from rising. We must do that for all sorts of reasons which I will not go into now, although I suppose I could and still keep within the rules of order. In the next few years this country has to give away to our Colonies a lot of productive equipment so that they may raise their standards of living. That is one of the prices we have to pay for peace. We cannot meet colonial discontent with pattern bombing and the suppression of constitutions. We have to give a lot away on overseas account to our Colonies. We have to give unrequited exports by way of capital goods to enable them to raise their standard of living to something like our own.
I am not promising my working-class supporters that if we get a Labour Government at the next Election—as we will—everything is going to be easy, because it is not. We must have savings in this country.
I wonder whether the Financial Secretary has looked at a little book in the Library, Barclays Bank Monthly Review for November, 1953. There is a grim article in that issue. I am a Socialist and have advocated Socialism for many years, but I do not rejoice in the imminent breakdown in capitalism if it means that the people who put me into this House are going to starve.
The current issue of Barclays Bank Monthly Review points out that in the last five years, 1948 to 1952, personal saving has accounted for about only 3 per cent. of all new investment in this country. That is pretty grim. Personal savings are at a low ebb, which means that the capitalist system is on the way out unless somebody does something about it pretty quickly. Much as I want capitalism to go, I do not want it to do so until I have a new system ready to put in its place. We have to encourage saving in this country, and the greatest evil of the continuance of post-war credits in their present condition is that there is a wholehearted mistrust in working-class minds throughout the country of the entire financial set-up, the entire business of saving, the entire business of money.
I am not pleading for social credit, I am staying within the framework of orthodox finance. The time has come when we have to induce people to spend lesson consumption, particularly the luxurious forms of consumption of which many of the Labour supporters are rather fond. We must have some saving in this country, but we shall not get it while this ghost of post-war credits is grinning down all the time on the scene of the meeting where the savings campaign speaker is pleading his case. We just will not get it.
Another reason we have to pay these post-war credits off now is that there is something about them which is sinister, which is enough to make anybody cynical of the whole bag of tricks. I refer to the following circumstance. I am 64. I am due to be paid out on 31st January, 1955. Supposing something happened to me meanwhile, my dear wife, who would then be my widow, would actually be due to be paid out sooner than I would since she will be 60 next year. Supposing, however, that the two of us were killed in an aircraft crash or a railway smash, my heir is my daughter. She would not be able to have my post-war credit until the year 1983. Supposing, however, my daughter were to "go west" in 1982, my oldest grandchild would be the heir to my post-war credit and she, poor girl, could not inherit it until the year 2009.
This is too silly to be true, but it makes working-class people not merely suspicious

and resentful but completely contemptuous of the whole bag of tricks. The time has come when the Financial Secretary would be doing a good turn to the capitalist system, in which he believes and I do not, and he would be doing a good turn to the precarious economy of this country if he paid off all post-war credits. I feel that the system suggested by my hon. Friend the Member for Sowerby would not do because people cannot be trusted with the initiative in these matters. Yet, without any legislation, there is something which the Financial Secretary could do easily if he would. It would make rather a lot of work for the members of the trade union over which my hon. Friend the Member for Sowerby presides—

Mr. Houghton: We would do our best.

Mr. Smith: The Financial Secretary could do it next week without legislation. It would not mean inflation, and the people who voted for him would say that the Tory Goverment had done a good thing. All he has to do is to issue Treasury bills. They do not need to be for only one month or two or three, and there is no reason why they should not be for x months. The hon. Gentleman has only to fill in the number of months applicable to the case of the recipient of the Treasury bill. My own would be for £130-odd payable on 31st January, 1955. The only conceivable objection to the idea I am putting forward is that it would make a lot of clerical work, but no doubt my hon. Friend the Member for Sowerby would meet that.
If we had Treasury bills dated at the appropriate birthday of the recipient, the suspicions of the people who returned my hon. Friends and me to the House would be allayed. They would then have a document conveying interest to them at, I suppose, 2⅜ per cent. per annum. That is the rate of interest on the three-months Treasury bill and there is no reason why it should not be the rate of interest on the x-years Treasury bill. It would be very easy. It would be purely administrative. There would be no inflation with it, and confidence would be restored to the minds of the people. If the hon. Gentleman will do this, his party can have all the credit. It would do the country a lot of good.

9.31 p.m.

Mr. Emrys Hughes: I was interested in the speech of the hon. Baronet the Member for Handsworth (Sir E. Boyle) because of the light it threw on the mechanics of the Conservative Party. At Margate, we had the great example of the Conservative Party revolting against its leadership, a movement with which I, as a rank and file member of the Labour Party, cordially agree.
I wish to speak tonight on behalf of the completely disillusioned Tory working man who, after having given a democratic and overwhelming mandate to the Conservative Party on the subject of post-war credits, finds that the matter is raised on the first possible occasion not by a Conservative hon. Member but by my hon. Friend the Member for Lough-borough (Mr. Follick). If the platform had been defeated in the case of a Labour Party conference under the Labour Government, Labour hon. Members would have used the first available opportunity to bring pressure on their own Government to carry out the party's democratic mandate.

Mr. Houghton: Where are the Conservative hon. Members?

Mr. Hughes: Yes, where are they? Tomorrow, Conservative working men will want to know why only six Conservative Members of Parliament attended this momentous debate to carry out the instructions given by the rank and file to the Conservative Party. There is not one Conservative hon. Member from Scotland present.

Mr. Gerald Nabarro: There is one hon. Member for Worcestershire here, and that is what matters.

Mr. Hughes: I should like some further information from Conservative Party Members who are present about how the mandate was given by the rank and file. I was completely dissatisfied by the explanation given by the hon. Member for Handsworth. He is one of the few hon. Members opposite who speak with authority as economists. I presume that that was the reason why he was appointed a scrutineer at the Conservative Party conference. It needed somebody with a knowledge of Keynesian economics to

count the votes at the Conservative conference.

Sir E. Boyle: I merely happened to be at the end of the row nearest the room where the votes were being counted.

Mr. Hughes: That involves us in a further mystery. I asked the hon. Member to give us a little enlightenment as to why a ballot needed to be taken on the issue. His remarkable explanation was that they could not count the hands. So Conservative Party scrutineers cannot even count.

Sir E. Boyle: It was because the voting in both rooms was so close.

Mr. Hughes: If the Conservative Party cannot provide scrutineers who can count 2,000 votes, we cannot expect anything very definite from it in solving our economic problems.

Mr. Houghton: If my hon. Friend will permit me, in fairness to the Conservative Party conference and the scrutineers, I think we ought to admit that at the last T.U.C. we lost 1,700,000 votes.

Mr. Speaker: And in fairness to the rules of the House, I must say there seems to be no Ministerial responsibility for the matter which the hon Gentleman is now discussing.

Mr. Follick: On a point of order. Is this an Adjournment debate on post-war credits, on which I have asked for money to be paid to needy people, or is it a debate on the Margate conference? I thought it was a debate about money being paid to needy people.

Mr. Speaker: That is not a point of order.

Mr. Hughes: Unfortunately, there is some Ministerial responsibility on this matter. I know that you, Mr. Speaker, do not bother to read the reports of Conservative Party conferences, but I do, and I wish to inform you that the hon. Gentleman who replied from the platform on behalf of the Conservative Party was the Financial Secretary to the Treasury. Now, we have another mystery—whether that Minister has any responsibility.
I think that a serious attempt should be made by the Minister to clear up this matter. What does he intend to do to


appease his rank and file? What does he intend to do to yield to the clamant demand that is coming from the working men of the Conservative Party that these post-war credits shall be paid? If it is said that the Minister has no responsibility in this matter, I am tempted to agree, but I ask him to give us a more satisfactory answer than he gave to the Conservative Party conference at Margate.

9.37 p.m.

Mr. Charles Doughty: Everybody who has lent money, of course, likes to be repaid, quite regardless of the purpose for which the money was used or whether the person who has to repay can pay without inflicting very great hardship on other people. As one who was not a member of the Government which borrowed the money—I think very few hon. Members sitting here tonight were here in 1942, 1943 or 1944 when the money was borrowed—it is not difficult for me to say that the money has been spent and is not there.
It has been spent upon conducting a war and in paying for it, or part of it, because future generations will have to pay for the rest, and any picture which suggests that this Government or any other Government is sitting upon £572 million and refusing to pay out to those who think it is time that it was paid out is an entirely false picture. The money has gone up in smoke, gone away in tanks, gone to the bottom of the sea in ships and in other methods that were very necessary at that time.

Mr. Houghton: The hon. Gentleman will probably agree that voluntary savings at that time went exactly the same way?

Mr. Doughty: Oh, no; I do not agree for one single moment that that was what was happening. It was taken at the time on the assumption and understanding that, sometime post-war, it would be repaid. Savings were put in on the understanding and with the guarantee that they would be repaid upon demand, which is a very big difference indeed.
The only matter which is being discussed in this debate is whether a Treasury order should be issued that this money should now be repaid. I should like to know from the Financial Secretary to the Treasury, if such an order

were made, by how much the Chancellor of the Exchequer would have to say next Budget day it was necessary to increase taxation in order that that Treasury order should be fulfilled. I make no guess, but at least a shilling would have to go upon the Income Tax of all the rest of the people. [Hon. Members: "Why not?"] Why not? Because the prosperity of this country and the prosperity of the people who live in it depends upon holding down, and if possible reducing, taxation, and, unless that can be done, we shall lose orders in the markets of the world and unemployment will start all over again.

Mr. Nabarro: I am sure that my hon. Friend does not want to mislead the House. The amount £572 million would not equal at the present rate the yield of 1s. in the £ on the Income Tax but but approximately 4s. in the £.

Mr. Doughty: I am very much obliged to my hon. Friend.

Mr. Follick: The hon. Gentleman was not in when I began my speech, and Mr. Deputy-Speaker ruled out certain observations that I made. My idea was not to pay out £572 million but to give some satisfaction to many needy people.

Mr. Doughty: I was in the House not only when the hon. Member opened his speech but for some time before. I heard him say that, and I heard Mr. Deputy-Speaker rule him out of order. Despite a second attempt to bring back by a devious method the same argument, he was again ruled out of order by Mr. Deputy-Speaker. I do not propose to follow the hon. Member into those wholly wrong paths into which he allowed himself to go until he was called to order.
Not only would that evil of excessive taxation be inflicted upon this country if such a task were undertaken, but the perils of inflation which we are now holding down to the utmost of our capability would be loosed upon the whole fabric of this country. What would happen if 572 million pounds notes were printed and distributed right throughout this country? Would there not be a scream about the inflationary effect that they would have? Would there not be a rise in prices? The proposals to which I have listened from the other side of the House amount to absolutely no solution of the problem.
What is the suggestion? That instead of paying the money out directly in cash we pay it out through the Post Office. It matters not what course we take for that purpose. If we say that instead of paying it through the post we pay it through the Post Office, it makes no difference at all. If we say that some people might leave it in the Post Office, I reply that it is just those people with the least feeling of patriotism who would be the first to draw it out.
If we choose Treasury bills, what is to happen to them? Are we to take them and discount them? I am sorry to hear that the hon. Member for South Ayrshire (Mr. Emrys Hughes) has such an unfortunate view of the mortality rate in his family. I only hope that he will last the few more months that are required, and we shall be happy to see him here, if there is not a General Election in the meantime, enjoying the luxury of his post-war credits. He is entitled to it.
We must always remember that this country carries a load of debt around its neck. The rate and method of repayment of these credits have been calculated, and I do not think it is quite so depressing an arithmetical and geometrical progression as the hon. Gentleman made out. So far as this country can afford, this debt—it is a debt and not money that is being withheld—is being repaid. Any other system would only result in inflation and excessive taxation with all its evil and its consequences of rising prices and unemployment.
Hard as it may be on those who have a genuine and honest difficulty, and while one fully appreciates their feelings as expressed at Margate, we must recognise the hard fact that £572 million cannot be handed out indiscriminately by this Government or by any other Government at the present time with any hope of maintaining lower taxation and a fall in the rising costs of living.

9.45 p.m.

Mr. John McKay: I have listened with great interest to this discussion. When it began I thought that it was going to be confined to a rather narrow field of thought, but, as it has continued, it has become wider and wider. I wondered what was the point of the hon. Member for Loughborough (Mr. Follick)

in putting down this subject for the Adjournment when he wanted the whole matter discussed. The discussion has been so wide that it has taken into consideration the question of the balance of payments, the question of the returning of this mighty sum of money to those to whom it is owed in this way and that, and also the fact that we are in such an economic predicament today that the great need for the moment is to start a tremendous campaign for saving money.
The big ideas which have been engendered by this debate appear to me to be rather off the point. The hon. Member for Loughborough said he hoped that hon. Members would try to impress the Treasury with the real problem that exists and with the real feelings of the people in the country about this matter. One can call it a debt, a loan, or what one likes, but the point is that this money is owing to the people.
The big problem just after the war ended was how the country could pay off this debt. Naturally, the Government had to experiment in this direction, and they did so on a very limited scale. They tied down the repayment of post-war credits to men of 65 and to women of 60. People were very patient for a few years because they realised the difficulties and the anomalies that existed in regard to this problem. But the sad experience of a large number of hon. Members has brought the conviction that whatever the difficulties may be—and no doubt there are many—and however great the anomalies that would arise may be, there is a tremendous amount of feeling in the country on this matter.
I want to impress upon the Treasury that this is a problem which can be modified. The original method can be amended, and how to do that is really the point of this discussion. I believe that the technical position is that we should consider the problem in its totality. Some amendment is required to meet the needs of the people to whom the money is owing. The only reason I have spoken upon the matter is to try to impress upon the Treasury, and the rest of the House that the time has now arrived when it should be realised that, whatever difficulties may exist, this is a debt owing to the people, which, though limited in its application, is creating very many anomalies and hardships in individual cases. The


time has come when any Government, if they are at all anxious to meet the expressed will and desires of the people, should make a real effort, during the ensuing months, to see what can be done.

Mr. Nabarro: The hon. Member used the expression "any Government." I hope he has read "Challenge to Britain." There is nothing in that about repaying post-war credits.

Mr. McKay: I expected that the hon. Member had sufficient experience to know that one does not put everything into the challenge. Everything is not put into a programme. Necessities and problems arise, and new thoughts form. As time goes on various Governments change their attitude and practice as new things, and thoughts, and arrangements emerge.

9.51 p.m.

Mr. Stan Awbery: So that the Financial Secretary to the Treasury should clearly understand the human problem that lies behind the question of post-war credits, he ought to go into the homes of some of our working people and see how they are endeavouring to manage with the wage that they are getting, but running into debt while, at the same time, money is owing to them by this Government.
This is not like many debts. An hon. Member said a few moments ago that the debt that was contracted compulsorily does not pay interest like most debts. Therefore, the contributor under the post-war credit system has lost possibly 3 or 4 per cent. for 12 years, and if, at the present time the cost of living is 10 or 15 per cent. more than it was when the money was invested, then his £100 would be worth £85 to £90.

Mr. Houghton: Perhaps my hon. Friend would permit me to say that, at 3 per cent. interest, there would be lost £184 million.

Mr. Awbery: I am not concerned with the great economic problems which the Financial Secretary to the Treasury will throw at us presently, but with the human side. I received a letter only this morning from a person who holds post-war credits. He said he had been ill for some time, is unable to work, and will be unable to work at all for the rest of his

life. He is running into debt and the Government are holding post-war credits belonging to him. He asks me whether I can press the Government to pay out his post-war credits so that he can clear himself now, instead of waiting until he is 65.
An hon. Member said that if he, himself, should die before he reaches 65 years, the money will fall to his wife; if she is not old enough to receive it it will go to his children, and thus it can go on from generation to generation.
The Financial Secretary may want to know how it is proposed to start repayment. I want to do it in a gradual way, and he can do it in a gradual way, by repaying first those people who are unable to work.

Mr. Speaker: I understand the position to be that it would require legislation to benefit any particular category of persons. The only subject which can be discussed on the Adjournment, in this connection, is paying back all the post-war credits, because that can be done without legislation.

Mr. Awbery: I want to point out that in delaying payment of post-war credits we are breaking faith with the people who made this contribution.

Sir W. Darling: Sir W. Darling (Edinburgh, South) indicated dissent.

Mr. Awbery: The hon. Gentleman shakes his head, but yesterday we had an example of the Government breaking faith with the officers on the question of pensions. Now we are breaking faith with the people who gave their money during the stress and strain of the war to help this country out of its difficulty, and the time has now come when they should be repaid.

Sir W. Darling: I suggest that the Government are not breaking faith. The bargain that was made was that these sums of money which were withheld during the war would be repaid to men at the age of 65 and women at the age of 60. What bargain has been broken?

Mr. Awbery: I accept the statement of the hon. Gentleman that it was agreed that this money should be paid back when the Government are in a position to do so. But let us put ourselves in the


position of a man who holds post-war credits and is ill. He cannot get his post-war credits, and we say to the Government that they should pay them out because they have the money. If the Government can spend £3,500 million on armaments in three years, why cannot they pay out to post-war credit holders the money that is due to them?

Mr. Follick: Would my hon. Friend agree that if this money were paid out, a lot of it, especially in the case of well-to-do people, would go back into the bank and the Government would still have the use of it, while the remainder would go to needy people who require it?

Mr. Awbery: That would help the position of the country considerably. In many cases, if post-war credits were paid out the money would merely be transferred from one account to another.
People who write to me almost daily about post-war credits understand very little about the great economic problems that confront the country. They do not know a great deal about the Budget, but they know a good deal about the budget which they have to balance every Friday night. I ask the Financial Secretary to transfer himself, in imagination, from the Front Bench and from the Treasury into the kitchen of a working man who owns post-war credits, and to consider what he would think of the position when he found, on a Friday night, that he was running into debt and the Government owed him money. We urge the Government to give serious consideration to the problems of such people.

9.58 p.m.

Mr John Arbuthnot: The hon. Member for Bristol, Central (Mr. Awbery) said that he approaches this problem from the human angle, and I am certain that all hon. Members on both sides of the House who urge upon the Government that something should be done, for the holders of post-war credits approach it precisely from that angle. I myself have a number of constituents who are drawing National Assistance and who, at the same time, own post-war credits which they are unable to encash.
I have a suggestion which I should like to put to the Government for their consideration. I believe that this problem could be overcome if the post-war credits

were endorsed with the date on which the present holder became 60 in the case of a woman and 65 in the case of a man, and that a promise should be made that these post-war credits would be repaid at that date, quite regardless of who the holder of the post-war credits happened to be at that time. If that were done, those post-war credit documents would then become negotiable, and the people on National Assistance would be able to encash them for their current market value. This would mean in effect that these people in difficult circumstances would have an asset which they would be able to spend.

It being Ten o'Clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Kaberry.]

Mr. Speaker: Would the hon. Member's idea require legislation? I do not know if the endorsement of these certificates to render them negotiable securities would require legislation. I imagine it would.

Mr. Boyd-Carpenter: I should not like to make a dogmatic statement on the matter. I should be inclined to think that it would, but without further examination I should not like to say that that would definitely be so.

Mr. Speaker: I shall give the hon. Member the benefit of the doubt.

Mr. Arbuthnot: Thank you very much, Mr. Speaker. I am very much obliged. All I suggest is that the Government should consider the idea that I am putting forward. It has been suggested that my proposal would be inflationary, but I do not think that it would, because, just as some previous holders of post-war credits would find themselves in funds because they had sold those post-war credits, by the same token the people who had bought the post-war credits would find themselves with money frozen to the same amount.
I suggest that a proposal of that kind would go a long way towards meeting the problem of those people who are hard up, without being in any way inflationary. That would be of considerable assistance, but I am told that it would cost a certain amount of money. That is perfectly true. The estimates are that


there would be something in the nature of an additional payment to the tune of about £2 million a year, over the years, and an initial extra payment of £7 million would be required if we were to take into account those people who had died before reaching the age to encash their post-war credits.
I personally should confine this proposal to the present holders of post-war credits. It would be perfectly fair to do so. The initial payment of £17 million would not then be at issue, and the problem facing the Government could be solved for a matter of £2 million a year, which, bearing in mind the enormous advantage that it would be to many people in very difficult circumstances, is a burden that we should certainly shoulder.

10.3 p.m.

Mr. Henry Usborne: I came into the House not with the intention of speaking in the debate but because the question of post-war credits is of great interest to all Members of Parliament. I have intervened—and I shall be very brief in doing so—very largely as a result of the extraordinarily interesting speech made by my hon. Friend the Member for Nottingham, South (Mr. Norman Smith). I urge very strongly that his suggestion should be supported.
I am particularly glad that the hon. Member for Dover (Mr. Arbuthnot) has disposed of that rather ridiculous criticism which was being ventilated in his normal fashion—with abuse—by the hon. Member for Kidderminster (Mr. Nabarro), because he did not understand it. It has now been pointed out, perfectly clearly, that if a Treasury bill, appropriately post-dated, was sold by one person, it must be bought by somebody else, and the mere fact of it being negotiable would not produce inflation. It would be inflationary only to the extent that in due course, on the appropriate date, it could be cashed, and that money would then add to the inflationary pool
The hon. Member for Handsworth (Sir E. Boyle) seemed to attack the general proposition on the grounds that although Lord Keynes was brought in in support by my hon. Friend the Member for Sowerby (Mr. Houghton), anything which

Lord Keynes proposed could be dismissed, because what Lord Keynes said had proved to be wrong, since his real anxiety was about a depression which has not yet arrived. The hon. Baronet—speaking as one economist about another—said that what Lord Keynes ought to have been anxious about was the problem of the balance of trade and the consequent financial problem. I also read that same book, the biography of the late Lord Keynes by Harrod, and I got the impression that Lord Keynes was vividly aware of this problem. The only mistake in fact that he made was in assuming that the instrument of the World Bank and the International Monetary Fund would be able to solve it. Towards the end of his life—

Mr. Nabarro: On a point of order. Are we allowed to discuss all of the Keynesian theories?

Mr. Deputy-Speaker: I understood the hon. Member to be developing the Keynesian theories in connection with post-war credits.

Mr. Usborne: I was merely developing, very briefly, a very small facet of them. If the hon. Member thinks that that is all of the Keynesian theories I think he had better keep quiet.

Mr. Nabarro: I know more about them than the hon. Gentleman ever will.

Mr. Usborne: I was not attempting to answer the hon. Member. I think it is a waste of time to try. I was trying to deal genuinely and seriously with an appropriate speech and an appropriate point ably made by the hon. Baronet the Member for Hands worth who is, unfortunately, not here at the moment, probably for a very excellent reason. I am sure he would have stayed if he could, and that he has not left us out of any discourtesy.

Lieut.-Colonel Lipton: How does my hon. Friend know?

Mr. Usborne: I think that all the points made on this side of the House are valid, and in so far as any criticism has been thrown at us we could easily answer it. I would make this point. The hon. Baronet the Member for Edinburgh. South (Sir W. Darling) argued—

Sir W. Darling: No hon. Baronet sits for that constituency. There has been no promotion.

Mr. Usborne: I beg the hon. Gentleman's pardon. I was carrying matters a little too far. However, the hon. Gentleman was making the point in an interjection that no faith was being broken because these post-war credits had always been associated with a given age for repayment, and that is not true.
Originally, when the money was taken off the citizens, it was understood—clearly understood—that it would be paid back as soon as might be. Everyone realised that that might be a few years after the war, but that then they would get it back. It was only in 1946, when it became clear that the situation was not unfolding as it had been envisaged that it would, that we had to put the age factor into the scales.

Sir W. Darling: "We"? In 1946, there was a Labour Government.

Mr. Usborne: The British Government in 1946, yes.

Mr. Nabarro: The Socialist Government.

Mr. Usborne: The real, underlying reason for post-war credits, the whole system of the loan, that was clearly understood by everyone, was that they would be a wonderful monetary instrument to use in the recession that was naturally expected to follow the war—naturally expected, but that, curiously, has not arrived.

Lieut.-Colonel Lipton: Because of the Labour Government.

Mr. Usborne: Because of the Labour Government, yes.
The long and the short of it is that this scheme proposed by my hon. Friend the Member for Nottingham, South does need very careful consideration. I want to underline this fact, that working people, ordinary people, do fed now that they have been very badly treated indeed in relation to post-war credits. They were quite convinced that they lent the money on short-term and that as soon as might be it would be given back. Now, by one means or another, one Government after another think of excuses by which apparently it will never get paid at all.
The point has been made in this debate that we do need savings and that unless we are honest with our people we cannot get people to believe in the honesty of the methods of saving. That is enormously cogent, and should be taken into consideration. A possible way to deal with the matter is by the issue of some scheme on the lines of a Treasury bill which would be dated and could be negotiated, which could be sold by those who are in need and bought by those who do not want the money at the moment.
This is a desparately important matter, much more important than most people think. Unless we do something about it very soon indeed we can never hope to persuade people to save in that or any other way because they will not trust the financial, banking mechanism of this country. Once bitten, twice shy.

10.11 p.m.

The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): In accordance with custom, I suppose in the first place I should declare a personal interest, although it is a personal interest which, under the present law, is somewhat remote. I am also sorry to say that it is not quite as large a personal interest as that which the hon. Member for Sowerby (Mr. Houghton) disclosed.
I appreciate that this is a subject which rouses genuine and sincere feelings and that it is of legitimate and proper interest to a great many people in this country. Probably all hon. Members in their personal capacity from time to time experience moments of exasperation at contemplating a piece of paper containing certain figures with which they can do nothing useful at present. That is a very human and understandable feeling which it is undoubtedly the duty of all Governments to take into account.
There are, of course, two major difficulties in discussing this interesting and important topic on the Motion for the Adjournment. In the first place, there are the rules of order, which apparently compelled the hon. Member for Lough-borough (Mr. Follick) to advocate with his accustomed force and dexterity a proposal which he has indicated he does not want to be carried out—to advocate it in order that he might incidentally advocate proposals clearly out of order which he would like to see carried out.
That must inevitably constitute a very unsatisfactory method both for other hon. Members and for the hon. Member to whom it falls to reply from this Box to a discussion on a matter of this interest and importance. I must therefore ask hon. Members to appreciate that I am under precisely the same difficulties of the rules of order as have interfered in greater or lesser degree, in accordance with their adroitness in dealing with the rules of order, with hon. Members who have spoken.

Mr. Follick: rose—

Mr. Boyd-Carpenter: I am afraid I cannot give way. The hon. Member took much longer than the time which I have left.
The second point is that any proposal would inevitably be a budgetary matter. A decision to make available either the very large sum of money which the hon. Member for Loughborough has formally sought to be released or the smaller sum which I contemplate he had in mind would be essentially a matter to be considered by the Chancellor of the Exchequer in connection with his Budget proposals. These are inevitably, therefore, matters about which it would be very difficult for me to say anything definite at this stage of the year.
I hope we shall not cloud these discussions, as I thought at times the hon. Member for Loughborough and the hon. Member for Wall send (Mr. McKay) did, by seeking to introduce purely emotional and partisan considerations. The hon. Member for Loughborough used the word "fraudulent" and the hon. Member for Wallsend, as I understood him, expressed somewhat similar sentiments on the subject of policy in this matter.

Mr. Follick: The hon. Member's own people did.

Mr. Boyd-Carpenter: My own people are much better mannered. The hon. Member for Loughborough must recall this: if there is any force in that contention, the charge would lie more fully against right hon. Gentlemen opposite, who not only initiated the policy in operation under the existing law for payments at 65 and 60 but maintained it for some five years. I am not making any suggestion that their policy in that respect

was fraudulent or dishonest, but I am entitled to say that it is not relevant, true or helpful to make a similar suggestion when precisely the same policy is carried out by my right hon. Friend and myself. I hope we can discuss this matter as one of reason and importance without trying to cloud it with prejudicial and contentious adjectives which do not lie in the mouths of hon. Members opposite, who supported the late Administration with more or less fidelity.

Mr. Follick: On a point of order. I did point out that we were quite as much to blame in this matter.

Mr. Deputy-Speaker: That is not a point of order.

Mr. Boyd-Carpenter: I take it from that intervention that the hon. Gentleman's views are that the late Administration was fraudulent. That is not a matter for me to argue, and it may assist a calmer contemplation of this matter if I briefly review the facts.
These post-war credits were created under the Finance Act. 1941, and were created in place of the amounts of tax relief which were lost by the taxpayer by reason of the reduction in the personal allowances. A single person's allowance was reduced from £100 to £80, a married man's allowance from £170 to £140, earned income and age relief from one-sixth to one-tenth and the exemption limit from £120 to £110. The sums which we are discussing this evening arise in respect of the tax paid as a result of the reduction of these allowances which would not have been payable had these reductions not taken place.
Of the original £800 million—the hon. Member for Loughborough was not quite right as to the latest figures—£208 million has actually been paid out. A further £20 million was set off against Income Tax arrears under an arrangement made by the right hon. Member for Bishop Auckland (Mr. Dalton) when he was Chancellor of the Exchequer, leaving the figure, as the hon. Member for Sowerby correctly stated, of £572 million as the outstanding credit.
I have listened very carefully to this debate and I do not think that any hon. Member has seriously advocated the immediate payment out of the whole sum


of £572million. I think that I can take it that in substance if not in form there was substantial agreement on that.

Lieut.-Colonel Lipton: No.

Mr. Boyd-Carpenter: I will seek to analyse that in a moment. I think that most hon. Members will appreciate that the payment out of so large a sum in one instalment would quite clearly carry with it, not only very substantial and serious inflationary consequences, but in an effort to finance our payments or alternatively to counter-balance in some degree that inflationary pressure there would have to be an increase in taxation. That is the background of this matter.
This is the moral of the problem. If the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton), who in this, as in so many matters, is unlike so many of his hon. Friends, is really advocating that, I would ask him to think for a moment about the implications of the situation. The implications, I understand, are these. If it was, on his own showing, impossible for the late Government during six years to discharge their obligations—because I am sure he accepts my view that they were honourable people desirous of discharging national obligations if they could, and therefore the fact that they did not pay during the six years was because in their view it was impossible—and he thinks that within two years our financial policy has been so manifestly successful as to enable us to undertake this immense load. I hope that he will tell the electors of Brixton how successful has been the financial policy of the Government which from time to time he criticises.
That is really the implication of the hon. and gallant Gentleman when he suggests that it is now possible and reasonable for us to do in one step what the late Government, in my view in all the circumstances quite rightly, found themselves unable to do.

Mr. David Logan: Is it possible for the hon. Gentleman to tell us how they can get it?

Mr. Boyd-Carpenter: If the hon. Gentleman would not take up a number of precious seconds, it might increase my chances of doing so.
There is the problem. I cannot, for very clear reasons, go into the various

alternative proposals to that of the hon. Member for Loughborough which have been put forward, for the reason that they would involve legislation and that it therefore is not possible for me to comment upon them. I think, however, that I should not be straying beyond the rules of order and incurring Mr. Speaker's displeasure if I invited the attention of the House to the written answer which my right hon. Friend the Chancellor of the Exchequer gave on 10th November to my hon. and gallant Friend the Member for Edinburgh, West (Lieut.-Commander Hutchison), who had suggested one of these expedients. My right hon. Friend said:
This and other suggestions for the payment of post-war credits will be considered when I am framing my Budget proposals, but I cannot, of course, say what the result of this consideration will be."—[OFFICIAL REPORT 10th November, 1953; Vol. 520, c. 27.]
That makes it perfectly clear that my right hon. Friend has undertaken to consider the various proposals, which have been put forward from all quarters of the House, to see whether by means of adopting them or any variation of them it is possible to make progress in this matter.
I fully agree with what was so well said by the hon. Baronet the Member for Handsworth (Sir E. Boyle) in his quotation from the "Economist" that this is an obligation to be met, and that any suggestion that it was not accepted as an obligation to be met by any Government would have most serious repercussions throughout the financial field. Both the "Economist" and the hon. Baronet were saying a very sensible thing, which cannot be said too often in this context, and I fully associate myself with what they say.
Equally in the consideration which my right hon. Friend has said he will give to this subject, of course he will not—and here I reply to the hon. Member for Bristol, Central (Mr. Awbery)—ignore the human side of this problem, which he has very much in mind, and perhaps particularly in this context. Although I do not agree with a good deal of what the hon. Member for Bristol, Central said, he was in many ways on to a very good point in bringing this matter down to its human implications, and there is much force in what he said.
My hon. Friend the Member for Dover (Mr. Arbuthnot) ventilated a series of


very interesting proposals, which he has also been good enough to put forward on previous occasions. For the reasons I have already given, it clearly is not possible for me to say more than that those very interesting proposals deserve consideration, and, I am sure, will receive it. Obviously—my hon. Friend would be surprised if this evening I were to say anything else—I cannot comment further upon those proposals but they were certainly put forward with great clarity and gave grounds for a most interesting discussion.
The hon. Member for Nottingham, South (Mr. Norman Smith) treated us to a long possible vista of domestic catastrophe, which, I am sure it is the prayer of allhon. Member on both sides will not come to pass in his case. The grounds that he gave us for hoping for his survival over the next few months—his survival in the flesh if not as an hon. Member of the House—certainly reinforce our wishes for his good health. In his very amusing way the hon. Member touched on one of the difficulties of the system as it at present operates, in the fact that under the present regulations, misfortunes of death before the particular ages so fixed can result in postponement of the payment of the credit for a considerable period.
The hon. Member, with whom I do not always agree, was undoubtedly on an extremely important aspect of the situation. I remind him and the House, however, that that aspect was not created by any proposal for which this Government are responsible. It is the consequence of the original provision made by the right hon. Member for Bishop Auckland, when he was Chancellor of the Exchequer, under which these payments are made, and made only, on attaining the ages of 65 for a man or 60 for a woman.
I am not in any sense trying to shunt off responsibility for such alterations as may be found possible, but I think, in view of part of the tone of the hon. Member's speech, that I am entitled to suggest that if this be an anomaly and an outrage upon commonsense, then it was an anomaly and an outrage upon commonsense created by the right hon. Gentleman the Member for Bishop Auckland. As far as I remember, it was not criticised by the hon. Member at the time,

though I will give him the credit for having been very free with his criticism of the financial policy of all Governments, whether of his own party or on the other side of the House. [Interruption.]
The question has arisen of these Treasury bills, which the hon. and gallant Member for Brixton has been kind enough to remind me of in what he regarded no doubt as sotto voce. We all make that kind of mistake from time to time, and sometimes in a somewhat embarrassing way. There again, there is a proposal of interest not, of course, without cost, and it falls for consideration whether this matter would be dealt with more satisfactorily by expending such funds as may become available on the payment of interest on existing credits, rather than making these funds available for accelerating the final pay-off of the credits.
I am not expressing any dogmatic opinion at the moment. I am asking hon. Members to remember that to use the money in that way for the payment of interest means that there is proportionately less money on any hypothesis available for the final paying off of the credits. Therefore, perhaps there is an even balance, according to one's own point of view, as to which is the wiser and more equitable step to take.
I am not seeking to dismiss any such proposal out of hand this evening. I think probably I should be anticipating legislation if I did, and in any event this is the time of the year which does not permit me to indulge in any very precise forecast of what it may be possible for my right hon. Friend to do when he gives this matter the consideration which he has promised to give in connection with his Budget proposals.
Finally, I can add this. Most, if not all, of the speeches in this debate have been designed as contributions to the consideration of a matter which has been of concern to previous Governments, as I am perfectly certain it is to this Government. We shall certainly take full advantage of the views that have been expressed, and which are now recorded with habitual fidelity by the Official Report. We shall give the fullest weight to them on their merits, and those designed to be helpful will be given the full consideration that helpful suggestions deserve.
It is perhaps the merit of a debate upon the Adjournment that it enables views to be expressed in one way or another, subject always to the limitations of the rules of order, which, though they may not necessarily appear to have had an immediate effect, nonetheless are available for my right hon. Friend and for the Government to consider at leisure when framing their proposals.
I can give the assurance that all the views and proposals put forward will receive that consideration in the period of the year on which we are entering. I cannot forecast, of course what will be the result and it would be very wrong of me to do so. Certainly at this time of

the year in which financial proposals are considered, these matters will be before my right hon. Friend. Therefore, this debate comes very properly in point of time, and, despite the difficulties with which the hon. Member for Lough-borough was faced and which on the whole he successfully overcame, I am sure the debate has been a great help.

The Question having been proposed at Ten o'Clock, and the debate having continued for half an hour, Mr. Speaker adjourned the House without Question put, pursuant to the Standing Order.

Adjourned accordingly at Half-past Ten o'Clock.